Review of the Australia-Vietnam Climate Change

Delivery Strategy 2011–2016, and Suggestions for the Period

to 2020

Koos Neefjes, 26 August 2016

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TABLE OF CONTENTS Acronyms .......................................................................................................................................... ii

Key messages ................................................................................................................................... iv

Executive Summary ........................................................................................................................... v

S1. Review of the Australia-Vietnam Climate Change Delivery Strategy 2011-2016 ........................ v

S2. Analysis of climate change policies and responses in Vietnam .................................................vii

S3. Options for climate change engagement in the period to 2020 ................................................ix

1 Introduction .............................................................................................................................. 1

2 Review of the Climate Change Delivery Strategy 2011-2016 ....................................................... 3

2.1 Delivery Strategy 2011-2016: Outcomes and Theory of Change .......................................... 3

2.2 Modifications of the DS during implementation ................................................................. 4

2.3 Achievements, strengths and lessons re climate change adaptation ................................... 4

2.4 Achievements, strengths and lessons re green growth ....................................................... 7

2.5 Achievements, strengths and lessons re planning and investment ...................................... 9

3 Analysis of the Climate Change Policy and Aid Investment Landscape in Vietnam .................... 11

3.1 Vietnam’s climate change policies and expectations for international support ................. 11

3.2 Public expenditure and climate change ODA: adaptation focus ........................................ 11

3.3 Encouraging private sector investment in GHG emissions mitigation ................................ 14

4 Options for Climate Change Engagement in Vietnam in the Period 2016-2020 ......................... 17

4.1 Australia’s Economic Diplomacy Strategy and Aid Investment Plan................................... 17

4.2 Aim of Australia’s Climate Change Engagement and Prioritisation Principles .................... 18

4.3 Climate Change Adaptation: Mekong Delta ...................................................................... 18

4.4 GHG Emissions Mitigation: Energy .................................................................................... 20

4.5 Mainstreaming Climate Change into AIP Investments ....................................................... 20

4.6 Australia, joint DP-GoV partnerships and climate policy engagement ............................... 23

4.7 Australia and climate change in Vietnam: communication highlights ................................ 24

Annex 1 Summary of Climate Change Portfolio (DS 2011-2016) ................................................. 25

Annex 2 Summary of Australia’s main climate change related investments in Vietnam (update

November 2015) ............................................................................................................................. 26

Annex 3 Climate change leaders in the Government of Vietnam ................................................ 28

Endnotes ......................................................................................................................................... 29

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ACRONYMS ACIAR Australian Centre for International Agricultural Research

ADB Asian Development Bank

AIP (Vietnam) Aid Investment Plan

AFD Agence Française du Développement (French Development Agency)

AusTrade The Australian Trade and Investment Commission

CCFSC Central Committee for Flood and Storm Control

CFSC Committee for Flood and Storm Control (province level)

CDM Clean Development Mechanism

CIFs Climate Investment Funds

COP21 21st Conference of Parties (to the UNFCCC)

CPEIR Climate Public Expenditure and Investment Review

CSIRO Commonwealth Scientific and Industrial Research Organisation

CTF Clean Technology Fund (one of the CIFs)

DHMCC Department of Hydro-Meteorology and Climate Change (MONRE)

DMC Disaster Management Centre (based in MARD)

DPs Development Partners

DRM Disaster Risk Management

DRR Disaster Risk Reduction

DS Australia-Vietnam Climate Change Delivery Strategy 2011-2016

EVN Electricity Vietnam

EU European Union

FAO Food & Agriculture Organisation of the United Nations

FDI Foreign Direct Investment

FIT Feed-in-Tariff

GEF Global Environment Facility

GCF Green Climate Fund

GGGI Global Green Growth Institute

GHG greenhouse gas

GIZ Gesellschaft Fur Internationale Zusammenarbeit (German International Development

Agency)

GoV Government of Vietnam

GW giga Watt (installed power generation capacity)

ICMP Integrated Coastal Management Programme

IDA International Development Association (under the World Bank)

IoE Institute of Energy

INDC Intended Nationally Determined Contribution

iNGOs international Non-Governmental Organisations

JICA Japan International Cooperation Agency

KfW German banking group, including KfW Development Bank

KOICA Korea International Cooperation Agency

MARD Ministry of Agriculture and Rural Development

MDP Mekong Delta Plan

MIC Middle Income Country

MONRE Ministry of Natural resources and Environment

MOST Ministry of Science and Technology

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NAMAs Nationally Appropriate Mitigation Actions

NATEC National Agency for Technology Entrepreneurship and Commercialization (under MOST)

NCCC National Climate Change Committee

NTP-RCC National Target Programme to Respond to Climate Change

ODA Overseas development Assistance

REDD+ Reducing Emissions from Deforestation and forest Degradation in developing countries;

and the role of conservation, sustainable management of forests, and enhancement of

forest carbon stocks in developing countries

SDG Sustainable Development Goal

SEDPs Social Economic Development Plans

SoE State-owned Enterprise

UNDP United Nations Development Programme

UNEP United Nations Environment Programme

UNFCCC United Nations Framework Convention on Climate Change

UNIDO United Nations Industrial Development Organization

USAID United States Agency for International Development

VNRC Vietnam Red Cross

VPCC Vietnam Panel on Climate Change

VSEA Vietnam Sustainable Energy Alliance

VWU Vietnam Women’s Union

WB World Bank

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KEY MESSAGES

The Australia-Vietnam Climate Change Delivery Strategy 2011-2016 (DS) achieved good impacts:

+ resilience of many women and men increased, especially in the Mekong delta

+ capacities and knowledge base improved, especially re climate change adaptation

+ disaster management and adaptation policy was influenced and a network was developed

+ climate modelling capacities improved and climate projections were used

+ energy efficiency capacities improved, limiting the increase of greenhouse gas emissions

+ the SPRCC (a climate finance scheme), adopted a mechanism for adaptation investment

+ a review of climate public expenditure and investment (CPEIR) is often quoted

Lessons from DS implementation are the following:

- there could have been more (strategic) use of Australian technical and policy expertise

- the DS is multi-faceted and better links between programs could have added more value

- more policy influence might have been possible, on climate change adaptation and energy

/ emissions mitigation, some of which would have enabled the private sector better, but

that depends strongly on human resources and aid modalities

Climate change policies in Vietnam are well developed. Vietnam has accessed significant

international climate finance, and developed capacities and governance structures. Vietnam’s

Intended Nationally Determined Contribution (INDC) includes a GHG mitigation and an adaptation

component. The INDC’s mitigation target is seen as unambitious, but will be reviewed in 2018.

Overall, Australia should aim to support Vietnam with the implementation of its INDC.

Climate change adaptation in the Mekong delta is Australia’s primary strength. Building on this

would help achieve a safe, prosperous and sustainable Mekong delta. Even with no or little new

climate aid, Australia should try to maintain and possibly expand its role in the delta as follows:

• Mobilize Australian expertise (CSIRO; ACIAR), and “out-post” Australian experts

• Continue to support the DP-GoV partnership on Mekong delta, and policy dialogues;

• Build a partnership on climate proofing of small scale infrastructure;

• Add value to Mekong delta products, and promote Australian export and investment

• Support knowledge centres and insurance industry re losses and damages (L&D).

Australia could also engage with greenhouse gas (GHG) emissions mitigation, by enabling FDI and

equipment export from Australia in support of Vietnam’s energy security. This could be supported

by policy analysis on barriers to renewable energy and energy efficiency, and policy dialogues.

Mainstreaming climate action in the Aid Investment Plan is possible, in the Partnerships on:

• Women’s Economic Empowerment (resilience in agriculture, livestock or aquaculture)

• Enterprise Development (PPPs on water supply; enhance agro-industrial value chains)

• Restructuring for a more Competitive Vietnam (energy market reform; insurance of L&D)

• Transport (climate proofing of small scale infrastructure)

• World Bank (advise other partnerships; knowledge products; renewable energy)

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EXECUTIVE SUMMARY

This paper (1) presents a brief review of the Australia-Vietnam Climate Change Delivery Strategy

2011-2016; (2) analyses the climate change policies and responses in Vietnam, including public and

private sector investments; and (3) provides options for Australia to consider in climate change

engagement through aid, investment and trade in the period to 2020, including priority themes,

sectors, modalities, partners and policy forums.

S1. REVIEW OF THE AUSTRALIA-VIETNAM CLIMATE CHANGE DELIVERY STRATEGY 2011-2016 The Delivery Strategy (DS) had two strategic outcomes, formulated based on a thorough context

analysis and a valid theory of change:

1. Building community resilience - Vulnerable communities demonstrate higher resilience and

sustainable livelihoods to respond to climate change and climate-related disasters.

2. Promoting low carbon growth - Vietnam harnesses opportunities for productive green

growth through increased capacity in the application of clean technologies and low carbon

measures in the energy sector.

The DS was modified during implementation, but the planned programs were largely implemented,

despite deprioritising climate change as a result of political changes in Australia during the planned

period. The DS programs were organised in three clusters, and reviewed as follows.

A. Achievements, strengths and lessons re climate change adaptation The programs in this cluster included the Integrated Coastal Management Programme (ICMP,

implemented by GIZ); six community-based climate change action grants to international NGOs and

their local partners; the “Strengthening institutional capacity for disaster risk management in

Vietnam, including climate change related disasters - Phase II (SCDM II)” project of UNDP with Oxfam,

the Vietnam Red Cross (VNRC) and the Vietnam Women’s Union (VWU); an independent study of

the expected impacts on the delta of hydropower projects in the mainstream of the Mekong river;

technical assistance through the World Bank; and technical assistance to climate-proofing of the Cao

Lanh bridge with e.g. gender sensitive relocation of households from the construction area.

This cluster of programs focused on the Mekong delta in particular. It amounts to Australia’s primary

strength on climate change responses in Vietnam. This cluster had impacts “on the ground” and on

policy, accumulated considerable knowledge and experience, and a strong network was built up:

Resilience and livelihoods of nearly a quarter million women and men in different parts of

Vietnam improved, especially in the Mekong delta, e.g. as a result of coastal protection and

climate smart agricultural model development and testing by the ICMP and the NGOs.

Capacities of many women and men farmers were built, and of e.g. 25,000 teachers on

climate change adaptation and disaster risk management. National and local public

institutions working on Disaster Risk Management (DRM) improved their capacities as a

result of the project of UNDP & partners.

There was policy influence through the UNDP & partners project, e.g. on the Law on Disaster

Management, and on governance in the Mekong delta through processes initiated by the

Mekong Forum.

ICMP, the NGOs, UNDP and the WB programs accumulated and documented a large amount

of research and experience; and the study on impacts of hydropower is of good quality.

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A strong network was built up in different Vietnamese ministries and provinces, with NGOs,

scientists and development partners (DPs) through those programs, and in several cases

Australian volunteers were somehow engaged too.

There is evidence that there were useful exchanges between programs, e.g. the WB design of a

substantial new loan was supported by Australia and made use of experience accumulated in the

ICMP. However, the weaker points are (a) the large majority of these efforts do not include or make

optimal use of Australian technical and policy expertise; (b) links between programs have not always

been made and could have added value; and (c) more policy influence might have been possible.

B. Achievements, strengths and lessons re green growth The green growth cluster included the following programs: the Climate Innovation Centre (CIC),

which was developed by the World Bank and is a partnership with the National Agency for

Technology Entrepreneurship and Commercialization (NATEC) of the Ministry of Science and

Technology (MOST); the Vietnam Energy Efficiency Standards and Labelling (VEESL) program, a

partnership between the Australian Department of Industry and Science (DIS), the Vietnamese

Ministry of Industry and Trade (MOIT) and others; and the (power) Distribution Efficiency Project

(DEP) through the bilateral strategic partnership with the World Bank.

These programs focused on energy efficiency and had some impact:

The start of the CIC was delayed but in a first round in 2016 it awarded prizes to 19

entrepreneurs (including 7 women entrepreneurs) with promising initiatives on e.g. energy

efficiency, renewable energy and sustainable agriculture.

The VEESL worked with other projects in Vietnam and contributed to implementation of

energy performance standards and labelling policy including design and operation of an

online registration system for energy labelling and building local test capacity.

The DEP provided technical assistance and built capacity in MOIT and Power Companies to

help apply smart grid technology and develop appropriate tariff regimes in order to facilitate

reform in the power sector.

But the impact of this green growth cluster in the DS was limited. It failed to engage with the issue

that matters most for increasing energy efficiency (as well as encouraging renewable energy), which

is that (fossil fuel based) energy is artificially cheap in Vietnam. Notably, the technical assistance on

power tariffs could have put this on its agenda, which is a lesson for design of future partnerships.

C. Achievements, strengths and lessons re planning and investment The cluster of programs on planning and investment included: financing and policy dialogue as part

of the Support Program to Respond to Climate Change (SPRCC), which is a joint DP-GoV mechanism

that has mobilized over USD1billion finance based on agreed policy actions in different sectors; joint

DP efforts to help Vietnam coordinate development investments in the Mekong Delta; support to

the Ministry of Planning and Investment (MPI) through the World Bank to develop a resource

mobilization framework and track public spending on climate change; the Commonwealth Scientific

and Industrial Research Organisation (CSIRO) worked with Vietnamese scientists on downscaling of

climate change projections, to inform Vietnam’s official climate projections and to support planning

of climate change responses; and Australia provided scholarships to study in Australia, fellowship

programs, training of natural resource managers in vulnerable coastal zones, teachers and

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community trainers, as well as the placement of Australian volunteers in e.g. NGOs and multilateral

organisations in Vietnam.

These programs also had impact re adaptation and mitigation of climate change in Vietnam:

Australia induced the formulation of an SPRCC mechanism for investment in adaptation

projects, instead of only providing general budget support, and was an active participant in

SPRCC policy dialogues. It was also an articulate participant in policy dialogues about

Mekong delta development, with at least some impact on the Vietnamese policy agenda.

The “Climate Public Expenditure and Investment Review” (CPEIR) is a product of MPI, UNDP

and the World Bank that Australia supported through the latter, which is often quoted.

CSIRO work built capacities of researchers and informed Vietnam’s official climate

projections; findings are accessible and have been used; and links with the ICMP had been

established.

Scholarships, training programs and volunteer exchanges are undoubtedly helping the

country’s capacity improvements.

Lessons are also mainly about leveraging the Australian aid for policy influencing. There were

limitations in making optimal use of Australian expertise; weak links between programs that limit

added value of Australian cooperation; and policy influence could have been more. Australian

experts did not actively engage with the CPEIR; SPRCC funds allocated to adaptation-relevant

projects but not to the most “low regret” “Program 1002” on Community Based Disaster Risk

Management (CBDRM).

S2. ANALYSIS OF CLIMATE CHANGE POLICIES AND RESPONSES IN VIETNAM Vietnam has adopted many climate change policies, accessed significant international climate

finance, and has developed related capacities and governance structures. Vietnam’s Intended

Nationally Determined Contribution (INDC) submitted to the UN Framework Convention on Climate

Change (UNFCCC) includes a GHG mitigation and a climate change adaptation component. Vietnam’s

targets are partly to be achieved with domestic resources and partly conditional on international

support. It is currently formulating an action plan to ensure that the country is fully prepared for

comprehensive implementation of the INDC in the period 2021-2030. The mitigation targets of the

INDC are internationally seen as unambitious and will be reviewed; research on climate change

effects; formulation of adaptation and mitigation plans; assessment of specific technologies and

approaches; developing structures for managing climate finance; and various capacity building

efforts. The key authors of this action plan are included in the list of climate leaders in the GoV

(Annex 3).

However, (mainly public) investment in adaptation is not happening in a strategic manner yet, and

(mainly private) investment in GHG emissions mitigation is not yet unleashed:

A. Public expenditure and climate change ODA: adaptation focus Climate-related public expenditure (including ODA) in Vietnam is strongly focused on adaptation-

relevant infrastructure. ODA is reducing as Vietnam has attained Middle Income Country (MIC)

status but it can expect some finance from the Green Climate Fund (GCF) as well as other

(multilateral, bilateral) climate financing windows for implementation of the INDC. Some DPs remain

active, such as the World Bank, ADB and UN organisations; bilateral lending agencies (JICA, AFD, KfW,

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KOICA); and DPs providing grants and technical assistance such as the EU, USA, Germany and

Australia. Others focus their bilateral relations on knowledge exchange, policy advice, trade and

investment. E.g. spending from the SPRCC remains adaptation focused, and e.g. the World Bank

recently approved an adaptation loan concerning the Mekong delta, which also gets a national

public finance contribution (and Australia supported its design). International NGOs are also

reducing their funding but some continue to find funds for remote area development, disaster risk

reduction and e.g. climate smart agriculture, as needs persist in the poorest and most vulnerable

communities.

Addressing Vietnam’s weaknesses of a lack of strategic investment in adaptation such as through

“Program 1002” means that DPs should make sure that ODA reaches where it is needed, including in

priority regions such as the Mekong delta. Further improvement of the science underlying

adaptation plans and designs is needed too, and Australian funding of CSIRO was a good start. There

are several forums in which adaptation challenges can be addressed, and where policy and

programme knowledge is shared and sometimes policy dialogues take place, including the donor

group on Mekong Delta development whose members (including Australia) have organised

successive Mekong Delta Forums, and which hopes to become a joint DP-GoV partnership group.

B. Encouraging private sector investment in GHG emissions mitigation Some DPs will continue to fund green growth, especially renewable energy and also energy

efficiency, but expenditure on GHG emissions mitigation remains a small part of total public

expenditure (including ODA). The INDC’s mitigation targets would be achieved especially with

private domestic and foreign investment, but this is not yet happening. Electricity prices are very low

in Vietnam, which is a primary barrier to improved energy efficiency and to a switch from fossil fuel

based power production to renewable energy. In fact, emissions mitigation ambition could increase

substantially by phasing out indirect fossil fuel subsidies and putting a price on carbon, in particular

in the electricity sector.

Energy State-owned Enterprises (SoEs) such as Electricity Vietnam (EVN) have built up debts, making

it unavoidable that energy prices will go up, but this is still seen as politically undesirable. A modest

increase of the average retail price of power could “unleash” FDI in wind and solar power, as well as

energy efficiency improvements. Nevertheless, there are indications that countries such as South

Korea are starting to provide export guarantees in support of renewable energy in Vietnam, and e.g.

the World Bank is planning some financing, but this has not yet materialised into major investments.

Australia also has strengths in solar and wind energy, including major investment in Australia,

research & development (R&D), and its industrial base with “technology holders” that could help

transform Vietnam’s electricity future from GHG emissions intensive towards low-carbon. But

Australia’s renewable energy and energy efficient equipment industries and financiers will only

become interested in the Vietnamese markets if these barriers would be tackled.

Forums in Vietnam in which policy and programme knowledge on GHG emission mitigation is shared

and policy dialogues will take place include the SPRCC and the forthcoming Vietnam Energy

Partnership Group of MOIT and DPs, in the context of Sustainable Development Goal (SDG) nr. 7 to

“ensure access to affordable, reliable, sustainable and modern energy for all” as well as GHG

mitigation targets in Vietnam’s INDC.

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S3. OPTIONS FOR CLIMATE CHANGE ENGAGEMENT IN THE PERIOD TO 2020 Australia has the opportunity to engage strategically with Vietnam on climate change policies and

programmes in the period from 2016 onwards. Australia’s climate change engagement can be

mainstreamed in or added to its Aid Investment Plan Vietnam (2015-16 to 2019-20) (AIP) and the

Economic Diplomacy Strategy for 2015-2017. This may mean additional bilateral climate change aid

or not; but Vietnam will access multilateral climate change funds towards which Australia is making

contributions. Trade and private investment are also important for delivering on green and climate

resilient growth.

It is suggested that the overall aim of engagement on climate change is to support Vietnam with the

implementation of its INDC.

A. Climate Change Adaptation: Mekong Delta Australia should concentrate on maintaining, possibly expanding its role in Mekong Delta climate

change adaptation, and consider e.g. the following:

Document, draw lessons on practical and policy aspects from the programs under the DS;

Mobilize technical resources on adaptation, including climate science (re the effects of

climate change; CSIRO) and agricultural research and development (ACIAR);

Assist Vietnam in development of adaptation monitoring and reporting systems and

practices;

Continue to support the joint DP-GoV partnership on Mekong delta development, aiming to

strengthen and actively participate in policy dialogues;

Continue funding the ICMP, NGOs, or alternatively “out-post” Australian expertise there and

in UNDP’s new GCF funded project and the World Bank’s ICRSL project, to expand the

knowledge base and inform policy dialogue;

Build on experience in climate proofing of infrastructure and related network, and jointly

with other DPs develop a project (partnership) on climate proofing of small scale

infrastructure;

In the context of the “Agro-Business Industrialisation scenario” in the Mekong Delta Plan

(MDP), add value to (climate smart) products from the Mekong delta, and promote export of

and investment in e.g. agriculture/aquaculture equipment and processing facilities;

Support Australian and Vietnamese knowledge centres and insurance industry to assess risks

of future unavoidable losses and damages, and help develop related insurance products.

B. GHG Emissions Mitigation: Energy Building on the results of the energy efficiency efforts under the DS, Australia could consider joining

other DPs in addressing fiscal (energy price) barriers to increased energy efficiency and renewable

energy deployment in Vietnam. This would enable the Australian and Vietnamese private sector to

invest and make major contributions to GHG emissions mitigation.

This could be supported by policy analysis in which Australian knowledge centres and e.g. GGGI seek

partnerships with Vietnamese knowledge centres. Partnerships could also be sought with

Vietnamese and international business representatives, including the Vietnam Business Forum.

C. Mainstreaming Climate Change into AIP Investments Mainstreaming of climate change in planned partnerships under the AIP could happen as follows:

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The Australia-Vietnam Women’s Economic Empowerment Partnership could include a

resilience aspect, as many economic opportunities relate to agriculture, livestock or

aquaculture, as well as processing and trade. Many techniques / models have been

developed, and ACIAR and other knowledge centres should be able to provide backstopping

in association with national knowledge centres in the roll-out of for the benefit of women.

Within the Australia-Vietnam Enterprise Development Partnership there may be scope for

support to public private partnerships on water supply, especially in the Mekong delta.

Water supply is the responsibility of local town/city-owned water supply companies and

water prices are regulated and very low. Reforms are needed because public finance is

limited and private investment must be mobilised. Australia could support research on water

pricing and private investment potential, in partnership with the agencies having experience

in this sector.

The Australia-Vietnam Enterprise Development Partnership could also help to enhance value

chains that focus on sustainable agriculture and aquaculture products for which there are

growing domestic and international markets, in the context of the “Agro-Business

Industrialisation scenario” in the Mekong Delta Plan (see also under A. above). Equipment

supply may offer opportunities and there are also certification needs. Research (ACIAR) and

experience with certain production models could support this too.

The Australia-Vietnam restructuring for a more Competitive Vietnam Partnership could take

on energy market reform aspects (see B. above). Competitiveness, trade and investment

also have adaptation aspects, as production units and trade (logistics) facilities need to be

resilient in the face of climate change effects. Australian investors’ production facilities and

supplies should not be disrupted by weather-related events. QBE, one of the world’s largest

insurance companies could be engaged in addressing losses and damages (see A. above).

The Australia-Vietnam Transport Partnership could drive in improved design and

construction standards for different types of infrastructure in the context of climate change

and strengthened planning, financial and enforcement capacities, and have major impact on

long-term resilience of Vietnam, including the Mekong delta in particular (see also A. above).

The Australia-Vietnam World Bank Partnership could strengthen the proposed ‘climate

resilience in the Mekong Delta’ pillar, and include support to mainstreaming adaptation in

other partnerships/projects, adaptation knowledge products and additional climate proofing

investments. It could also address energy challenges (GHG emissions), as the Mekong delta

is slated to host coal-fired power plants with related transport and pollution challenges,

while it has major potential for renewable energy generation (solar, wind).

D. Australia, joint DP-GoV partnerships and climate policy engagement There are some additional needs and opportunities that could be considered, in particular if

Australia wants to remain active in policy dialogues and support innovations:

Some DPs will focus on adaptation (in particular the Mekong delta), including the ICMP/GIZ

and the World Bank, but few will include DRR and loss and damage from climate change in

their portfolios. Australia would be able to build on its long held strengths in DRR by

partnering with UNDP (GCF project) and/or NGOs, and provide support to learning on loss &

damage mechanisms. These partnerships would include MARD as well as MONRE, and

possibly the insurance industry. It could be concretised through “out-posting” of experts.

Inputs into policy dialogues in Vietnam, visibility in Vietnam through media and other

communications, and thus a degree of influence should build on Australia’s strengths and

would be achievable through mainstreaming of climate in the planned investments under

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the AIP and potentially a relatively small financial envelope for additional activities in AIP

Partnerships. To make full use of accumulated experience, an active role should be

maintained and support could be provided by Australia to the emerging joint DP-GoV

partnership on the Mekong delta. But this would require substantial climate change

personnel/expertise at the Australia Embassy and possibly “out-posted” Australian experts

in projects or partnerships.

Should Australia decide to address GHG emissions reduction also in future, it should consider

taking an active role in the joint DP-GoV Vietnam Energy Partnership Group. Draft priorities

of this group include renewable energy production and power sector reform.

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1 INTRODUCTION

Implementation of the Australia-Vietnam Climate Change Delivery Strategy 2011-2016 is nearing

completion. After this Delivery Strategy (DS) had been approved and implementation had started,

political developments in Australia meant that climate change ceased to be a priority in its

international development cooperation. In many countries climate change programming halted but

the demand for climate change programming in Vietnam was strong and most of the DS was

implemented, though with some modifications (compare Annex 1 and Annex 2).

In the context of updates to aid policy, Australia could consider reinforcing its climate change

relations with Vietnam beyond 2016. Australia’s Economic Diplomacy Strategy for 2015-2017 and

the Aid Investment Plan Vietnam (2015-16 to 2019-20) (AIP) are still being refined and could

mainstream climate change actions. The AIP has considerable climate-relevance even though it was

not conceived as climate change support, and climate change responses could be made more

explicit and/or added with minor adjustments (the partnerships under the AIP are discussed in

section 4.5). There are also trade relations and (potential) Foreign Direct Investment (FDI) from

Australia into Vietnam in areas where climate proofing is key or where opportunities exist for GHG

emissions mitigation.

The “Declaration on Enhancing the Australia-Vietnam Comprehensive Partnership” signed in the

presence of the two Prime Ministers on 18 March 2015 included the statement that “Australia and

Vietnam recognise the importance of environmental protection and responding to climate change,

and will continue to look for opportunities to cooperate in these areas”. The Paris Agreement that

was reached at the 21st Conference of Parties (COP21) to the United Nations Framework Convention

on Climate Change (UNFCCC) in Paris in December 2015 also signalled a turning point for Australia. It

played an active role in the negotiations as chair of the Umbrella Group of Parties and committed to

allocate AUD1billion climate finance over the 5 years to 2020, or AUD200m per year, as Parties

recommitted to jointly mobilizing USD100b/year by 2020.

Australia has the opportunity to engage strategically with Vietnam on climate change policies and

programmes as both countries share interest in the success of the Paris Agreement, including

increasing ambition on greenhouse gas (GHG) emissions mitigation and adaptation to the effects of

climate change through five-yearly stocktaking exercises, reviews and modifications of their

Intended Nationally Determined Contributions (INDCs, which were submitted to the UNFCCC in

2015).

The above mentioned Australian climate finance commitment means an increase of the share of

climate change within Australia’s aid programme. This will be channelled through the Green Climate

Fund (GCF) and other multilateral mechanisms, and some will be allocated to bilateral programmes.

Although it is not certain that Vietnam would be included in new bilateral climate finance,

expectations are that climate change will stay on Australia’s agenda and backtracking on

commitments is unlikely, whatever the exact political outcome of recent elections.

Section 2 of this paper presents a basic desk review of the achievements, strengths and lessons of

the Australia-Vietnam Climate Change Delivery Strategy 2011-2016, as per its strategic outcomes.

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The review of the DS includes some lessons and highlights of links between Australia’s climate

change work and gender inclusiveness as well as private sector development.

This is followed by section 3 with an analysis of the present situation of climate change policies and

responses in Vietnam, funded domestically and internationally, and including public efforts as well as

relevant investments and interests of the private sector.

Section 4 provides suggestions on how Australia could strategically position itself in supporting

Vietnam to address climate change in the period 2016-2020. In doing so it is considering the

possibility that there will be some new bilateral Australian ODA to address climate change in

Vietnam over this period, or alternatively, that climate ODA would remain limited and the focus of

the climate change relations will be on knowledge, business and private investment focused

partnership.

A number of strategic options are provided in section 4, for priority themes, sectors, modalities,

partners and policy forums related to climate change, based on the achievements, strengths and

lessons of the Climate Change Delivery Strategy 2011-2016 (section 2) and the analysis of the climate

change situation in Vietnam (section 3).

Drawing on past experience and achievements as well as the potential future engagement by

Australia on climate change, some key messages for diplomatic engagement, reporting and public

communications are also formulated. This is done in the context of Vietnam’s policy priorities and

development needs and Australia’s climate change support and overall political and economic

diplomacy goals.

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2 REVIEW OF THE CLIMATE CHANGE DELIVERY STRATEGY 2011-2016

2.1 DELIVERY STRATEGY 2011-2016: OUTCOMES AND THEORY OF CHANGE The strategic outcomes of the Australia-Vietnam Climate Change Delivery Strategy 2011-20161 (DS)

were as follows:

1. Building community resilience - Vulnerable communities demonstrate higher resilience and

sustainable livelihoods to respond to climate change and climate-related disasters. (With a

focus on the Mekong delta.)

2. Promoting low carbon growth - Vietnam harnesses opportunities for productive green

growth through increased capacity in the application of clean technologies and low carbon

measures in the energy sector. (With a focus on energy efficiency and promotion of clean

technologies.)

The DS includes a context analysis and a Theory of Change (ToC), and outlines the required

management capacity and structure. It provides the planned climate change portfolio (see Annex 1),

which has been implemented with some modifications (Annex 2 gives the November 2015 update).

The ToC in the DS was developed by staff at the Embassy with advice from contracted experts, a

network of national and international partners in Vietnam, and climate change experts in Canberra.

This is an excellent effort and many elements of the ToC still apply today, even though the context

has evolved in Vietnam and internationally. The primary reason for this is that the work in Vietnam is

unfinished, despite support by Australia and other Development Partners (DPs).

For example2, considerable scientific analysis has been undertaken and the Vietnam Panel on

Climate Change was created officially, but e.g. analysis of the effects of climate change on agro-

ecosystems, suitability for crops and varieties has not been undertaken nationally, so the effects of

climate change cannot yet be included in agricultural extension messages on adaptation of varieties,

crops and cropping systems. Similarly, vulnerability assessment has been undertaken in many

communities and in e.g. the Mekong delta specific actions in different zones have been tested and

recommended. But comprehensive roll-out is yet to start in all parts of the country. Thirdly,

adaptation lessons and recommendations are not yet translated into national adaptation policy. A

fourth example is that although low-carbon growth analysis has been done and practical options

have been identified, the evidence of mainstreaming of low carbon actions in sector plans is limited,

and the private sector and state-owned enterprises have not yet comprehensively started to apply

low carbon measures. Critical policy breakthroughs regarding energy prices and related fiscal policies

are needed for a change in current trends and a reduction of greenhouse gas (GHG) emissions

intensity of the economy.

The fact that Vietnam ’s transition to climate resilient communities and a low-carbon economy is not

completed is obviously unsurprising and is not criticism on the implementation and effectiveness of

Australia’s programme under the DS. Several components appear to have had clear and lasting

impacts although that is less obvious for some others, as shown in section 2.3 and further.

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2.2 MODIFICATIONS OF THE DS DURING IMPLEMENTATION The planned programs under the DS are given in Annex 1, and Annex 2 gives the summary of the

actual climate change related investments in Vietnam as of November 2015. All planned programs of

the DS were implemented except a drought and flood mitigation project with ADB. Some financial

allocations were different from the plan, notably a reduction from AUD23m to AUD16.5 to the

Integrated Coastal Management Programme (ICMP) in the Mekong delta and an increase from

AUD8m to AUD14m to the Support Program to Respond to Climate Change (SPRCC).

Additional activities in Annex 2 (compared with Annex 1) are as follows (some come from non-DS

resources but are climate relevant): (a) a study on the impact of mainstream hydropower on the

Mekong delta; (b) technical assistance through the World Bank to identify and prioritize climate

resilient infrastructure and non-structural measures for the Mekong Delta, and to build regional and

provincial-level planning capacity for resilient investment decisions; (c) formulation of a resource

mobilization framework to enable and track support for Vietnam to realize the goals in its climate

change and green growth strategies; (d) technical assistance to incorporate climate-proofing and

environmental safeguards into the Cao Lanh bridge project; (e) support to development of a

planning framework to help Vietnam coordinate development investments in the Mekong Delta; and

(f) targeted fellowship programs for Vietnamese students on natural resource managers in

vulnerable coastal zones, and training for teachers and community trainers on managing

environment, climate and disaster challenges.

Annex 2 presents the programs in three clusters, on Adaptation and Disaster Risk Reduction, Green

Growth and Planning & Investment, which are discussed in sections 2.3, 2.4 and 2.5 respectively.

2.3 ACHIEVEMENTS, STRENGTHS AND LESSONS RE CLIMATE CHANGE ADAPTATION The bulk of Australia’s support focused on climate change adaptation, and most pertinently in the

Mekong delta. The primary rationale (see Annex 2) is that without protection from disasters, climate

change and (other) environmental risks economic development could be undermined. The impacts

of this portfolio of programs on resilience of women, men and communities and on policy, as well as

the accumulated experience and network amount to Australia’s primary strength on climate change

in Vietnam, but some qualifications can also be made and lessons can be learned.

The ICMP, with co-financing from the Government of Germany and implemented by GIZ in

partnership with the Ministry of Agriculture and Rural Development and 5 provinces, is responding

to prioritised climate change adaptation needs and has demonstrated very imported results3. It has,

for example, developed successful models and guidance for coastal protection that will be replicated

and scaled up under a World Bank loan; it has developed models re (coastal) sustainable livelihoods;

it has developed a gender tool to increase the participation of women in climate change adaptation

and disaster risk management4; schoolbooks were developed and 25,000 teachers were engaged on

environmental issues. The program has helped reduce vulnerability of tens of thousands of people

for extreme weather and storm surges of sea water, leveraged funding by the national and local

authorities as well as international agencies, and helped improve coastal governance. In cooperation

with other DPs, it also played a key role in the development of a regional coordination mechanism in

order to guide social-economic development of the Mekong delta, which is unique amongst

Vietnam’s regions.

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Six community-based climate change action grants to international NGOs and their local partners

have directly benefited nearly a quarter of million vulnerable people in 13 provinces, including the

Mekong delta. Livelihood models were developed and rolled out, reducing the impacts of disasters

and climate change on women and men, and in some cases reducing GHG emissions. The program

funded for example CARE’s “Integrated Community-based Adaptation in the Mekong” (ICAM)

project in villages in An Giang and Soc Trang province the Mekong Delta in partnership with the

Women’s Union, which improved capacity on gender-sensitive analysis and planning for community-

based adaptation (CBA) and disaster risk reduction (DRR), tested climate resilient agricultural

livelihood options, improved access to credit; and enabled integration of gender-sensitive

community based approaches and climate resilient livelihood support into commune level Socio-

Economic Development Plans (SEDPs). Some of the experiences funded by Australia were included in

a collection of lessons on Community-Based Climate Change Initiatives in Vietnam that was launched

before the 21st Conference of Parties to the UNFCCC in 2015 and shared widely, including Oxfam’s

support to mangroves for coastal erosion and storm protection on Con Chim Island in Tra Vinh

province, and the SNV project “Sowing the Seeds of Change - Community-based Climate Change

Mitigation through Sustainable Rice Production”, which increases crop and farm resilience and

reduces GHG emissions from rice cultivation5.

The project “Strengthening institutional capacity for disaster risk management in Vietnam, including

climate change related disasters - Phase II (SCDM II)” of UNDP with Oxfam, the Vietnam Red Cross

(VNRC) and the Vietnam Women’s Union (VWU) supported national and local public institutions

working on Disaster Risk Management (DRM). It had three expected outputs: (1) Enhanced national

and sub-national institutional capacities of the Central and Provincial Committee for Flood and

Storm Control (CCFSC, CFSC) members and main stakeholders to consolidate the disaster risk

reduction (DRR) legislative, policy and strategic framework; (2) Improved capacity of the Disaster

Management Centre (DMC) and CCFSC members to effectively and efficiently plan, implement,

monitor and evaluate the CBDRM program, ensuring gender sensitivity and participation of

vulnerable groups (e.g. migrants, particular ethnic minorities etc.) in both urban and rural areas; (3)

Evidence based action research on DRR and CCA utilized to improve policy and strategy and plans

developed and implemented at national, regional and international level. The project delivered

considerable training, developed guidelines and built capacities at different levels; it supported

formulation of the Law on Disaster Risk Management and Early Recovery policy; it assessed the most

vulnerable communities nationally (6,000 are being targeted by “Program 1002” on community

based disaster risk management, CBDRM6); and intervened in 54 communes7. The project did not

fully achieve targets related to research and re linking “Program 1002” with early warning systems. It

faced insufficient gender-disaggregated baseline data, but it achieved targets of men and women

participating in project activities. DRM is being mainstreamed in local Social Economic Development

Plans (SEDPs) of many localities as a result of the project, and it induced provincial authorities to

make financial allocations and develop partnerships with the private sector. The collaboration

between the Government, UNDP, Oxfam, WU and the VNRC is seen as a partnership model as it

draws on complementary strengths and encourages cooperation and mutual learning.

Australia also supported an independent study of the expected impacts on the delta of hydropower

projects in the mainstream of the Mekong river, responding to a need expressed by the Government

of Vietnam (GoV)8. This study is scientifically sound, and draws conclusions that are consistent with

other studies. For example, it concludes that a cascade of dams in the Mekong mainstream will

result in low to moderate changes in the hydrological regime in normal years, but strong river flow

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fluctuations and reductions can occur as a result of drawdown of hydro-reservoirs for maximum

power generation in dry years and seasons. The sediment and nutrient deposition in the delta

(Cambodia and Vietnam) could reduce by as much as 65%; salinity intrusion in the delta (the

Vietnam part) will worsen; and fish catch in Vietnam and Cambodia could reduce by 50% in a worse-

case scenario. However, anecdotal evidence suggests that by June 2016 many of the leading

Vietnamese scientists dealing with climate change adaptation and water management in the

Mekong delta had not yet been exposed to the study and it was not referenced in two leading

national studies advising on the Government of Vietnam’s forthcoming Mekong delta flood control

policy9, rendering the impact of the study on this critical policy nil.

Australia provided technical assistance through the World Bank to prioritize climate resilient

infrastructure and non-structural measures for the Mekong Delta. It enhanced understanding of

social, economic and environmental trade-offs through stakeholder consultation, e.g. by supporting

the Mekong Delta Forum (2015, 2016). It supported the formulation of the Mekong Delta Integrated

Climate Resilience and Sustainable Livelihoods (ICRSL) Project10 of the World Bank. This project (a

USD310m IDA loan with USD77m co-financing by the GoV) links to the Netherlands-supported

Mekong Delta Plan (MDP)11. The planned sub-projects include lessons (roll-out of successful models)

developed under the ICMP (discussed above). This funding has ensured that Australia achieved

synergies from good cooperation with other DPs and the GoV.

In the context of large scale financing of the Cao Lanh bridge project in the Mekong delta, Australia

has provided technical assistance to climate-proofing of this project, to maintain connectivity also in

times of weather extremes and flooding, and for example gender sensitive relocation of households

from the construction area.

The above portfolio has provided Australia with a strong network in different Vietnamese ministries

and provinces, DPs and (international) NGOs. Australia has received a high profile and can claim

impacts of its support on communities, policies and investments, as briefly outlined above. But some

weaknesses also offer lessons. Notably, (a) the large majority of these efforts do not include or make

optimal use of Australian technical and policy expertise; (b) links between programs have not always

been made but could have added value; and (c) more policy influence might have been possible.

GIZ, UNDP, WB and international NGOs are implementing agencies of a large part of the above

program portfolio but they include very limited Australian expertise. Their use of for example

analytical efforts on climate change in Vietnam by the Commonwealth Scientific and Industrial

Research Organisation (CSIRO) (see below) and agricultural development support by the Australian

Centre for International Agricultural Research (ACIAR) are not evident, while the latter has had a

long-standing presence and network in Vietnam. Furthermore, an important gap in Vietnam’s

knowledge of climate change is mapping of expected changes in cropping seasons and crop

suitability as a result of climate change, which limits formulation of adaptation plans in agriculture.

This arguably is within the shared expertise of CSIRO and ACIAR, and agricultural adaptation is (was)

a core element in the programs funded by Australia and led by GIZ, UNDP, WB and international

NGOs.

Regarding a lack of links, there is no clear evidence that lessons from the six NGOs and their local

partners receiving community-based climate change action grants were considered by the ICMP or

in the formulation of the World Bank’s Mekong Delta Integrated Climate Resilience and Sustainable

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Livelihoods (ICRSL) Project. NGO lessons relate to (agricultural) livelihood models as well as to ways

of working, i.e. participatory approaches and inclusion of both women and men in analysis, decision

making and action, and could have added important value to those other programs. Partnership

between different stakeholders was built into the program led by UNDP, and in one “aid quality

check” this was suggested to be used as a model for other programs.

The various strengths of Australia’s climate change adaptation programme position it well for

engagement with policy makers at the national and also the province level, and to some extent that

has happened (for example in Mekong Delta Forums). There was/ is however considerably more

scope for direct engagement than what appears to have taken place, on issues such as the

formulation of the Disaster Risk Management Law, adaptation planning in the Mekong delta, or the

new cooperation mechanism in the Mekong delta. This would however require Australia to have

more expertise based in the Embassy and/or more technical/ policy experts out-posted in projects,

even if projects are implemented by multilateral agencies or NGOs. For example, Germany (with GIZ)

and Belgium (with BTC) use technical experts to inform policy dialogues that are led by Embassy staff.

By comparison, Australia has a very substantial number of “volunteer assignments on climate

change/environmental sector” out-posted in NGOs and e.g. multilateral agencies, but these tend to

have short term assignments only and most are relatively junior, making them less powerful sources

of networks, information and advice when compared to senior advisors in GIZ or BTC projects.

2.4 ACHIEVEMENTS, STRENGTHS AND LESSONS RE GREEN GROWTH Support to clean energy and efficient production was provided for the primary reason that

innovative clean technologies and reducing barriers to private investment could deliver an efficient,

competitive economy (see Annex 2). The green growth cluster included three programs:

The Climate Innovation Centre (CIC) in Vietnam was developed by the World Bank with Australian

and UK (DFID) financial support12. It aims to support Vietnam to exploit opportunities for productive

green growth in priority sectors including energy, agribusiness and clean water. It provides small and

medium enterprises with seed capital, skills and networks to develop and bring to the market

innovative and commercially viable climate-smart technologies. Following significant delays, the CIC

was launched in December 201513. It is a partnership with the National Agency for Technology

Entrepreneurship and Commercialization (NATEC) of the Ministry of Science and Technology (MOST).

Australia insisted on activities in the project design to encourage women's participation but does not

have full confidence that women-entrepreneurs’ involvement will be achieved during actual

implementation. The 19 winners in the first round of awarded prizes in June 2016 included 7

women-entrepreneurs. The innovative investments that these 19 winners are pursuing include very

interesting and promising green technologies: on (a) energy efficiency (e.g. adobe brick making

machine; seawater-cooled LED lights for fishing; solar cooker improvements; rice husk ovens

replacing coal); (b) sustainable agriculture (e.g. a production model and consumption of closed

organic food without waste; production of fresh, delicious, safe vegetables, produced according to

internationally standardized processes); (c) renewable energy (e.g. a generator using solar energy,

wind; solar mini grids; solar water heaters); and other issues.

The Vietnam Energy Efficiency Standards and Labelling (VEESL) programme was implemented in a

partnership between the Australian Department of Industry and Science (DIS) and the GoV. It aimed

to build capacity in the Vietnamese Ministry of Industry and Trade (MOIT), the Vietnam Standards

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and Quality Institute (VSQI) and test laboratories, and help develop lighting and appliance energy

efficiency standards, registration, labelling, testing, compliance and monitoring mechanisms.14 VEESL

contributed to implementation of energy performance standards and labelling policy that is

expected to achieve savings of 70,000GWh by 2030 and cut household electricity bills by 10%. The

exact VEESL contribution to this cannot be quantified but, for example, it designed an online

registration system for energy labelling; helped process a backlog of registration applications;

increased local test capacity; and conducted market research. On e.g. the registration system VEESL

worked with other projects in Vietnam on the same subject (which were also mentioned in the

project design document), and VEESL is seen to have made a useful contribution on this technical

subject.

Australia supported the Distribution Efficiency Project (DEP) through the bilateral strategic

partnership with the World Bank in Vietnam. In the context of a large scale IDA loan as well as CTF15

financing for electricity grid hardware, Component C. of the DEP provided technical assistance and

built capacity in the Ministry of Industry and Trade (MOIT) and Power Companies to help Vietnam

apply smart grid technology and develop appropriate tariff regimes in order to facilitate reform in

the power sector. This included tariff advice to ERAV (the electricity regulator) “for improvement of

efficiency in electricity tariffs”, and e.g. customer surveys and measures to improve customer

satisfaction; implementation of advanced metering systems; and promoting efficient electricity use

through a customer awareness campaign as well as demand response programs16. Since before the

implementation of the DEP, UNDP as well as another part of the World Bank based in Washington

DC have studied Vietnam’s fossil fuel subsidies17, which take place in particular through the

electricity sector, as well as low-carbon development options18 which have been developed with

Government partners and shared widely. Vietnam’s energy prices and especially electricity retail

prices are unusually low by comparison with other countries, energy efficiencies are low throughout

the economy while carbon intensity is still rising, and non-hydro renewable energy deployment is

almost negligible. Vietnam’s electricity tariffs should increase by phasing out indirect support to

fossil fuel use in the electricity sector and putting a price on carbon, in order to encourage energy

efficiency and renewable energy deployment, but the DEP (Component C) has not included that in

its agenda and no Aide Mémoire of the DEP refers to this work by UNDP, World Bank / ESMAP, or

related work by others.

This last point is in fact about the main weakness of the green growth cluster in the DS and the

implementation and the limited impact of it. The context analysis in the DS rightly gives the energy

sector as the focus of GHG emissions mitigation actions, and energy efficiency is one part of that

(with renewable energy, but that is not a core element of the cluster of programs). The ToC rightly

points out that “increased knowledge and capacity in the application of clean technologies and low

carbon measures in the energy sector” are central and the private sector is seen as a key actor.

However, as long as (fossil fuel based) energy is artificially cheap, energy inefficiency is incentivized,

not efficiency. Innovations promoted under the CIC will have a harder time succeeding compared to

a context without fossil fuel subsidies and with a price on carbon (through taxes, fees or “cap-and-

trade” of GHG emissions). Labelling of household equipment will also have less effect on consumers

if electricity remains as cheap as it is. In addition, the present situation is not conducive to energy

efficiency or renewable energy investment by foreign investors.

Increased policy influence, based on networks and accumulated knowledge would also require

considerable capacity in the Embassy or out-posted in projects (as is the case on adaptation; see

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section 2.3). In the past this could have meant, for example, more active engagement by Embassy

staff in DP and DP-Government meetings on green growth and fossil fuel subsidies. And if Australia

maintains aid investments in green growth or wants to enhance green-trade and investment in

Vietnam, Australia could become an active participant in the forthcoming Vietnam Energy

Partnership Group, which will focus on policy dialogues.

2.5 ACHIEVEMENTS, STRENGTHS AND LESSONS RE PLANNING AND INVESTMENT A third cluster of programs supported by Australia covers broad planning, knowledge generation and

mobilising finance related to both climate change adaptation and mitigation, while it is important to

integrate climate change and environment into Vietnam’s broader development goals (see Annex 2).

Australia financed the Support Program to Respond to Climate Change (SPRCC) in the period to 2014,

which is a joint DP-GoV mechanism that has mobilized over USD1billion finance based on agreed

policy actions in different sectors that are relevant to climate change adaptation as well as

mitigation19. Australia provided grant funds (JICA, the World Bank and some other DPs provide

loans) and insisted that the SPRCC develop a mechanism for investment in adaptation projects that

have been prioritised by Vietnam, instead of only providing general budget support – which

happened and is an important impact of Australia. The SPRCC is a partnership of some DPs with the

GoV in which policy dialogue happens at different levels, depending on the stage of formulation and

approval of policy actions, including (annual) joint meetings of SPRCC partners and the NCCC, the

National Climate Change Committee chaired by the Prime Minister (in practice a deputy PM) and

attended by leaders of several ministries and provinces. In the period concerned Australia was a

vocal, active participant in SPRCC dialogues. However, time investment in “technical” discussions

was large (several times per year for periods of weeks with multiple meetings with individual

ministries) and effective participation requires in-depth knowledge of climate change aspects in

many sectors, and considerable human resource inputs. The SPRCC is supported by leaders of

Vietnam but does not attract strong interest of officials because dialogues and formulation of policy

actions are seen as conditionalities for budget support whereas SPRCC funds are not (directly)

allocated to their ministries, departments and/or projects. Indeed, SPRCC finance is used for

implementation of national policies such as the National Target Programme to Respond to Climate

Change (NTP-RCC), with small allocations to ministries for e.g. sector plan formulation. Much is

allocated to specific projects that are almost exclusively dyke and dam reinforcements in the coastal

areas, under the supervision of MARD and local authorities, whereas the subjects covered in the

SPRCC policy matrix are within the mandate of six ministries. Furthermore, the (dyke, dam) projects

funded by the SPRCC are climate-relevant, but many were designed before discussions on climate

change and sea level rise started and questions have been raised about strategic prioritisation of

SPRCC fund allocation. In particular, SPRCC finance has not been allocated to “Program 1002” on

CBDRM which remains underfunded (by public Vietnamese finance) but could be seen as the single

most effective “low regret” investment to reduce vulnerabilities of people and communities to the

effects of climate change (see section 2.3)20.

Australia is no longer active in the SPRCC, but engages with other climate-relevant partnerships

between DPs and the GoV. In particular, it is still active in joint DP efforts to help Vietnam coordinate

development investments in the Mekong Delta, which is important and could be enhanced further if

related Embassy capacity is maintained or enlarged (see section 2.3).

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Australia, through the World Bank, has supported Vietnam’s Ministry of Planning and Investment

(MPI) to develop a resource mobilization framework and track public spending, improve reporting,

and encourage private sector engagement (see Annex 2). This effort has had limited effect on private

sector engagement, but the World Bank and UNDP with MPI implemented an often quoted study on

climate public expenditure and related institutions and policies21. This study demonstrates that there

is significant domestic climate change adaptation-relevant public expenditure as well as climate ODA

(see also section 3.2). It also shows that there is scope for improving the link between (national)

policies and actual budget allocations.

Australia commissioned the Commonwealth Scientific and Industrial Research Organisation (CSIRO)

to work with Vietnamese scientists on downscaling of climate change projections, to inform

Vietnam’s official climate projections and to support planning of climate change responses22. This

has succeeded in building capacities of some leading scientific organisations and their researchers

and informing Vietnam’s official projections. The findings are still available and easy to access23, and

have been used for example in a large scale national publication on climate extremes24 that led to

the creation of the Vietnam Panel on Climate Change (VPCC). Claims in the Completion Report that

this program caused “changes in policy and planning methods and approaches” in Vietnam may be

exaggerated, partly because a proposed follow up phase did not take place. But, also as per the

Completion Report, links with the ICMP had been established, with results informing the design of

project activities in Ca Mau province, and the potential for further work on e.g. agricultural cropping

strategies and agricultural adaptation plans with for example ACIAR was highlighted25.

Australia provides numerous Vietnamese students with scholarships to study in Australia, including

environmental science and engineering, water management and other climate change related fields

(see Annex 2). Targeted fellowship programs have been implemented and natural resource

managers in vulnerable coastal zones, teachers and community trainers have received training on

managing environment, climate and disaster challenges under different programs. This, as well as

the (already mentioned) placement of numerous Australian volunteers in for example NGOs and

multilateral organisations in Vietnam demonstrates important capacity building efforts as well as

strengthening of people-to-people relations, which is an obvious strength of Australia.

However, despite Australia’s strength on for example knowledge generation (CSIRO) and policy

influencing (SPRCC), and attempts such as those of CSIRO at making links between different

programs and institutions, also on the cluster on planning and investment there was no optimal use

made of Australian technical and policy expertise; weak links between programs that limit added

value of Australian cooperation with Vietnam; and less policy influence than what might have been

possible (compare section 2.3 and 2.4). For example, Australia or Australian experts did not actively

engage with the CPEIR26 and Australia does not appear to have used that extensively in its policy

dialogues with the GoV; and SPRCC funds continue to be allocated to a series of adaptation projects

but not necessarily to strategic priorities such as the “low regret” national CBDRM “Program 1002”.

In order to do better on “connecting the dots” between different programs, provide conditions for

long term impacts of supported programs, and engage actively in joint DP-GoV partnerships and in

policy dialogues, Australia would need to minimally maintain current related Embassy capacity, and

would be more effective through expansion with senior experts in the Embassy and/or out-posted in

projects/ programs.

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3 ANALYSIS OF THE CLIMATE CHANGE POLICY AND AID INVESTMENT

LANDSCAPE IN VIETNAM

3.1 VIETNAM’S CLIMATE CHANGE POLICIES AND EXPECTATIONS FOR INTERNATIONAL SUPPORT Vietnam has adopted a comprehensive set of national climate change policies, has accessed

significant international climate finance in comparison with other developing countries, and has

developed substantial climate policy capacities and governance structures. This is a very good basis

for (continued) international support, for real action, and for results. However, weaknesses are that

(mainly public) investment in adaptation is not happening in a strategic manner yet, and (mainly

private) investment in GHG emissions mitigation is not yet unleashed (see section 2). These

weaknesses relate to policy, institutional capacity, as well as resource limitations.

Vietnam’s INDC includes a GHG mitigation and a climate change adaptation component. It lists the

main policies as well as ongoing and planned climate change response activities for the period to

2020, and sets targets for the period from 2021, when the Paris Agreement will come into force.

Vietnam’s actions are partly to be implemented with domestic resources and partly conditional on

international support (finance, technology, capacity building). The actions for which international

support is expected are a guide for bilateral and multilateral climate change support programming

(ODA) and also for international emissions mitigation off-setting and leveraging private sector

investment in green, low emissions and climate resilient initiatives.

Vietnam is currently formulating an action plan to ensure that the country is fully prepared for

comprehensive implementation of the Paris Agreement including Vietnam’s INDC in the period

2021-2030 and beyond. This (draft) action plan is a guide for international climate change support

over the coming 4-5 years, and subsequently for the actual implementation of the INDC (to 2030).

The draft action plan includes a review of Vietnam’s INDC (in 2017-2018) (note that currently

Vietnam’s GHG emissions mitigation target is internationally seen as unambitious); research on

climate change effects; formulation of adaptation and mitigation (green growth) strategies and plans

(because most of Vietnam’s existing policies apply to the period until 2020); assessment of specific

technologies and approaches (mitigation, adaptation and loss & damage); developing structures and

processes for receiving, allocating and managing climate finance; and various capacity building

efforts, including on measuring and reporting GHG emissions and effects of mitigation measures as

well as climate vulnerabilities and impacts of adaptation actions (to improve “transparency”, which

was a priority of Australia in UNFCCC negotiations). The key authors of this action plan are included

in the list of some climate leaders in the GoV as given in Annex 3.

3.2 PUBLIC EXPENDITURE AND CLIMATE CHANGE ODA: ADAPTATION FOCUS The figure below shows public expenditure in the period 2010-2012 in relation to the objectives in

the National Climate Change Strategy (NCCS)27, including ODA. This shows that climate-related public

expenditure in Vietnam is strongly focused on adaptation-relevant infrastructure. The small part on

mitigation-relevant expenditure does not appear to be leveraging much private sector investment

(see sections 2.4 and 3.3).

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The landscape of Development Partners (DPs) is narrowing as Vietnam has attained Middle Income

Country (MIC) status. Climate change financing is to some extent an exception to the trend of

reducing ODA, and Vietnam can expect to receive some grants and/or loans from the GCF as well as

the GEF CIFs and other (multilateral, bilateral) climate financing windows in the near future and

during implementation of the Paris Agreement from 2021 onwards.

Total Climate Change Public Expenditure (investment and recurrent) by NCCS Strategic Objectives (2010–2012 implemented,2013 budgeted by constant price 2010 VND billion) 28

The remaining DPs providing support to climate change responses include multilateral organisations

(World Bank, ADB and UN organisations, including UNDP, IFAD, UNEP, FAO and UNIDO); bilateral

lending agencies (notably JICA, AFD, KfW, KOICA); and DPs providing grants and technical assistance

such as the EU, USA, Germany, France, Australia, Belgium, Denmark, Finland and Norway29. Some of

those countries are phasing-out their ODA and will not provide bilateral funding beyond 2020. They

are expected to follow countries such as Sweden, the Netherlands, the UK, Spain and Italy in

pursuing partnerships that are occasionally supported by small (ODA-type) grants, but focus on

knowledge exchange, policy advice, trade and investment. The Netherlands is among the countries

particularly interested in climate change adaptation (Mekong delta, and more) as well as agricultural

development. The “Agro-industrial Business” scenario in the MDP was prioritised, which was agreed

by DPs and the GoV. This offers future cooperation in agriculture, fisheries, including related

processing and trade30. Australia has been a key partner in this and it must decide whether it wants

to keep its voice.

A large part of international climate change finance for Vietnam over the past few years and as

expected in the coming few years is channelled through the SPRCC, which currently consists of loans

from JICA, the World Bank, AFD and KOICA. Most of these funds are allocated to adaptation-relevant

infrastructure such as dykes, but because this is budget support, the identification of the actual use

of the funds is not fully possible. As explained in section 2, the strategic significance of the projects is

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questionable as many were designed before discussions on climate change and sea level rise started.

Notably, the SPRCC funds are not used to finance the national scheme on Community-Based Disaster

Risk Management (2009-2020), targeting the 6,000 communes most vulnerable to disasters (see

section 2)31. This national scheme is based on lessons from NGO-supported work in many

communities throughout the country, and is possibly the most significant “no-regret” adaptation-

relevant scheme in Vietnam that could increase resilience of the majority of vulnerable people and

communities, but it is underfunded. Non-SPRCC DPs (including Australia) can have a voice in the

SPRCC through intense meeting schedules and participating in the high level meetings, including

annually a meeting jointly with the NCCC, or make the same point in other high level joint DP-GoV

forums (see below).

ODA funded schemes other than the SPRCC that are implemented with or by the GoV and that may

include domestic public finance are also adaptation focused. In particular ODA schemes that include

major technical assistance components appear to be making a real difference in resilience of

communities and regions. This includes Australia-supported projects which get good reviews (see

section 2) and for example the recently approved Mekong Delta Integrated Climate Resilience and

Sustainable Livelihoods (ICRSL) Project32 of the World Bank (a USD310m IDA loan with about

USD77m national contribution), which was informed by Australia-funded program results (see

section 2.3).

Some international NGOs (iNGOs), including charitable foundations and research organisations with

a base in Vietnam are also scaling back or phasing out, though this change process is slower than

that of DPs, because needs persist in the poorest and most vulnerable communities. NGOs receive

funds from their home-governments as well as from regional funding windows of grant-donors such

as the EU and private foundations. Many continue to find funds for remote area development,

disaster risk reduction and e.g. climate smart agriculture. The total financial allocation in Vietnam of

iNGOs put together continues to be significant. An important part of this supports climate change /

disaster resilience and a much smaller part focuses on reducing GHG emissions. Often the core

elements of iNGO programs include improving (local) governance, pursuing social (gender) equality,

with environmental sustainability and/or climate resilience mainstreamed or secondary objectives.

Addressing Vietnam’s weaknesses of a lack of strategic investment in adaptation such as through

“Program 1002” (see section 3.1) and delivery of adaptation targets in the INDC, means that DPs

should make sure that their loans, grants and technical assistance reach where it is needed,

including in vulnerable communities. Adaptation support is needed on formulation of concrete

adaptation policies and investment programmes that can be expected to have real impacts,

including for regions such as the Mekong delta. For example, further improvement of the science

underlying adaptation plans and designs is also needed and Australian funding of CSIRO was a good

start (see section 2.5).

Forums in Vietnam in which adaptation challenges have been or can be addressed, to enhance

coordination and cooperation, where policy and programme knowledge is shared and sometimes

policy dialogues take place include the following:

1) The National Committee on Climate Change, chaired by the Prime Minister which

occasionally includes DPs in special meetings, notably SPRCC partners;

2) The SPRCC, with dialogues mainly with lower level officials and currently limited mainly to

the four funding agencies;

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3) The Climate Change Working Group and the Disaster Management Working Group of NGOs,

with occasional participation of (lower level) officials, Mass Organisations and Vietnamese

NGOs (these groups fall under the VUFO-NGO Resource Centre);

4) UN Disaster management meetings and thematic coordination groups, which include lower

or higher level officials (e.g. the Minister of MARD in recent meetings on drought);

5) The donor group on Mekong Delta development whose members have organised successive

Mekong Delta Forums, and that hopes to become a joint DP-GoV partnership group.

Joint DP-GoV partnership group have come and gone, including the Natural Disaster Management

Group (MARD, DPs and NGOs) and the Disaster Management Forum (MARD, MONRE, the UN and

other DPs and NGOs), which in the past have received support from Australia among others. If the

joint DP-GoV partnership group on Mekong Delta development materialises the partners need to

learn from the successes and failures of older and earlier joint partnerships.

3.3 ENCOURAGING PRIVATE SECTOR INVESTMENT IN GHG EMISSIONS MITIGATION The EU, Germany, the US as well as bilateral and multilateral development banks are not only

financing adaptation but also support green growth, especially renewable energy and also energy

efficiency. Nevertheless, expenditure on GHG emissions mitigation (including ODA) is a small part of

total public expenditure, as shown in section 3.2. Vietnam’s INDC provides mitigation targets that

are widely seen as important but also unambitious, in particular regarding what would be achieved

without external (public finance, technology) support. The INDC and (draft) action plan for

implementation of the Paris Agreement show that private investment is expected for GHG emissions

mitigation, but this is not yet happening (ref. the second major weakness mentioned in section 3.1;

see also section 2).

Emissions mitigation (-ambition) could increase substantially without much public finance (including

ODA) and with economic and environmental co-benefits through fiscal policy measures including

phasing out of indirect fossil fuel subsidies and putting a price on carbon, but for this a number of

policy barriers need to be tackled33. The indirect subsidies on fossil fuels are “forced” as the GoV

controls energy prices, and happen in particular in the electricity sector. Electricity prices and also

prices of petroleum products are low in Vietnam compared to other countries, which is a primary

barrier to improved energy efficiency and a switch from fossil fuel based power production to

renewable energy. Feed-in-Tariffs (FITs) issued for wind and biomass-based electricity production

are too low for attracting private investment including FDI, as is the case with the draft FIT for solar

PV-based power. Regulatory insecurity makes equity expensive and is a key barrier to large scale FDI

in renewable energy (electricity).

Export guarantees and other support by host governments of foreign investors has been applied to

investments in coal-fired power generation, but most countries and multilateral development banks

no longer do this, as the G8, the G20 and APEC have (repeatedly) committed to phasing out fossil

fuel subsidies. There are indications that countries such as South Korea and e.g. the World Bank are

starting to provide such support to renewable energy in Vietnam as solar PV and wind power have

very significant potential, but this has not yet materialised into major investments.

The GoV is facing growing public debt, and large energy State-owned Enterprises (SoEs) such as

Electricity Vietnam (EVN) have also built up enormous debts, making it virtually unavoidable that

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energy prices will go up, but this is still seen as politically undesirable. It has been estimated that an

increase of the average retail price of power by 15-30% could make renewable energy profitable and

could “unleash” large scale FDI in wind and solar power, as well as energy efficiency improvements

across the economy. Depending on policy choices, a carbon fee or tax could help achieve this and at

the same time help address the public debt situation. However, this would not just require (modest)

energy price increases, but also reform of the SoEs and energy markets, as well as measures that

help low-income households and certain businesses in coping with higher energy costs34.

Germany, Italy, South Korea, Spain, the UK and USA are examples of countries with a strong interest

in the (renewable) energy sector which has high significance for GHG emissions in Vietnam. Russia

and China have a less pronounced history of providing aid but both are heavily involved in the

energy sector and have significant trade and investment relations that are partly supported through

for example loan or export guarantees, currently related to e.g. construction of coal-fired and

nuclear power plants. Australian coal imports into Vietnam are modest but growing, notably

because of (new) power plants. At the same time Australia has important strengths in solar and wind

energy, with major investments in Australia itself. Australia is very strong on e.g. solar power related

research & development (R&D), and it has a strong industrial base with “technology holders” that

could help transform Vietnam’s electricity future from GHG emissions intensive towards low-

carbon35. Delivery of the mitigation targets requires large scale investment of the private sector.

Technical assistance and research can help leverage private sector investment and scale up GHG

emissions mitigation actions but appropriate policies must be in place, including policies on carbon

and energy prices, and reform of (energy) state-owned enterprises (SoEs) and energy (electricity)

markets36. Australia’s renewable energy and energy efficient equipment industries and financiers

will only become interested in the Vietnamese markets if these barriers would be tackled (see also

section 2.4).

Nevertheless, there are a number of policies and initiatives that do contribute to emissions

mitigation, despite the energy price barrier:

Vietnam is receiving international assistance from different agencies for the formulation of

Nationally Appropriate Mitigation Actions (NAMAs) that are in most cases frameworks for

public private partnerships that encourage private investment in low emission technologies

for industrial production and e.g. transport or public lighting.

Vietnam is a major host to Clean Development Mechanism (CDM) projects and participates

in a similar Japanese bi-lateral programme. Both about off-setting GHG emissions in

developed countries in return for low emission investments in Vietnam, partly in the private

sector, but (international) carbon prices are low and the scale is still modest.

The FAO, some NGOs and resident international (agricultural) research organisations are

working on low emissions, resilient and climate smart agriculture, but at a small scale.

Adoption of such techniques by farmers (the private sector) depends on co-benefits, notably

increased crop yields, profits and security.

Vietnam is a leading country on REDD+, reducing emissions from deforestation and forest

degradation, a mechanism under UNFCCC agreements. This is focused on technical

assistance, but in the so called “full REDD+” stage is expected to benefit from international

transfers to maintain forests – a kind of off-set programme likely to involve mostly public

and limited private funds. REDD+ or similar measures that stabilise upland soils or coastal

zones also have adaptation benefits, which is evident from Australian support through GIZ

and NGOs in e.g. the Mekong delta (section 2.3). Norway is the leading DP in funding REDD+

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technical assistance, with UNDP, FAO, UNEP, the World Bank and JICA delivering technical

assistance, as do a number of international NGOs. These initiatives also relate to the private

sector (e.g. timber processes and users; plantation owners) as well as state-owned forestry

enterprises.

Forums in Vietnam in which policy and programme knowledge on GHG emission mitigation is shared

and sometimes policy dialogues take place or will take place are as follows:

1) The National Committee on Climate Change, chaired by the Prime Minister which

occasionally includes DPs in special meetings, notably SPRCC partners

2) The SPRCC, with dialogues mainly with lower level officials (see section 2.5 and 3.2)

3) Various groups related to REDD+, partly with support from the UN-REDD programme

4) The forthcoming Vietnam Energy Partnership Group that is being prepared by the EU

Delegation with the Ministry of Trade and Industry (MOIT) and leading DPs (see section 2).

Some partnership groups have been more successful than others. Lessons about successful

knowledge exchange, programmatic coordination and policy dialogue include for example the need

for “ownership” by a ministry, active DPs, financial support to a secretariat, and clear links to

national policies or policy processes. Such lessons are currently being used for the design of the

above mentioned joint DP-GoV Vietnam Energy Partnership Group, in the context of Sustainable

Development Goal (SDG) nr. 7 to “ensure access to affordable, reliable, sustainable and modern

energy for all” as well as GHG mitigation targets in Vietnam’s INDC.

DPs that are particularly active in green growth, including NAMA formulation, energy efficiency and

renewable energy and who are remaining active in Vietnam for the foreseeable future include the

main development banks (World Bank, ADB, JICA, KfW, AFD, and KOICA), the EU with significant

budget support grants, and technical assistance agencies such as GIZ, UNDP, USAID and GGGI (the

Global Green Growth Institute based in South Korea, which is receiving Australian support). SNV,

WWF and some national NGO-members of the Vietnam Sustainable Energy Alliance (VSEA) work on

energy efficiency and/or renewable energy in Vietnam – but only SNV has reached a national scale in

their focal area (biogas digesters at household and farm level).

Delivery of mitigation targets in Vietnam’s INDC requires DP support to the action plan for Paris

Agreement implementation over the coming years (see 3.1), and active involvement in policy

dialogues on energy efficiency and renewable energy. The modest mitigation targets in Vietnam’s

INDC could be achieved or overachieved with additional economic gains for the country (instead of

costs) through energy policy reforms that would boost FDI, particularly in renewable energy and

create business and FDI opportunities for Australian technology-holding companies and financiers.

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4 OPTIONS FOR CLIMATE CHANGE ENGAGEMENT IN VIETNAM IN THE

PERIOD 2016-2020

4.1 AUSTRALIA’S ECONOMIC DIPLOMACY STRATEGY AND AID INVESTMENT PLAN Australia has opportunities to engage strategically with Vietnam on climate change policies and

programmes in the period from 2016 onwards.

Additional bilateral climate change aid may become available in Vietnam though that is not certain.

But whether additional bilateral climate finance becomes available or not, Vietnam will access

multilateral climate change funds towards which Australia is making significant contributions. For

example, Vietnam has recently been awarded a USD30m GCF project through UNDP on coastal

climate change adaptation with a major component on mangrove rehabilitation in the Mekong delta.

Vietnam continues to receive Global Environment Facility (GEF) projects, including projects on GHG

emissions mitigation. Furthermore, as Australia is an important World Bank member / shareholder37,

the World Bank is managing several climate funds and is e.g. financing the Support Programme to

Respond to Climate Change (SPRCC), a policy support operation providing low-interest loans from

several donors (see section 2 and 3)38.

Australia’s Economic Diplomacy Strategy for 2015-2017 focuses on the following:

Support domestic economic reform in Vietnam for a stronger and more competitive

economy, including support to public private partnerships on water supply and sanitation.

Support regional economic growth and resilience, including disaster risk management

integrated in the Cau Lanh bridge and other infrastructure projects in the Mekong Delta and

in the Northern Mountains, and strengthened political, planning and financial capacities.

Assist Vietnam to develop its human resource capacity to improve education outcomes for

Vietnam, through scholarships, the aid program and bilateral cooperation and capacity

building in the education sector including leadership training and research capacity building.

Support trade liberalization, promote Australian export (including education export) and

grow bilateral trade and investment, through support for Australian businesses and trade

negotiations.

Promote growth of the private sector in Vietnam through relevant aid programs.

Australia’s Aid Investment Plan Vietnam (2015-16 to 2019-20) (AIP) has three objectives:

1. Enabling and engaging the private sector for development

2. Assisting the development and employment of a highly skilled workforce

3. Promoting women’s economic empowerment, including ethnic minorities

There are five partnerships agreed under the AIP, which are currently being designed:

1) Australia-Vietnam Women’s Economic Empowerment Partnership

2) Australia-Vietnam Enterprise Development partnership

3) Australia -Vietnam Restructuring for a more Competitive Vietnam Partnership (Phase 2)

4) Australia-Vietnam Transport Partnership

5) Australia-Vietnam World Bank Partnership

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Australia should decide whether its wants to mainstream climate change in the Economic Diplomacy

Strategy and AIP, or whether it would a stand-alone program. The mainstreaming option is possible

with or without new climate aid resources but the latter needs new funds. Both also have

implications for human resources at the Embassy, for (Embassy) engagement in policy dialogues, and

for the possibility of out-posting experts in various projects and partnerships.

Mainstreaming climate change responses in the AIP partnerships is the focus of section 4.5. This is

preceded by options for engagement on adaptation (section 4.3) and GHG emissions mitigation

(section 4.4), based on some basic principles for making strategic choices (section 4.2).

4.2 AIM OF AUSTRALIA’S CLIMATE CHANGE ENGAGEMENT AND PRIORITISATION PRINCIPLES Australia has the opportunity to support Vietnam to address climate change in a strategic manner,

serving the mutual interests of Vietnam and Australia. It is suggested that Australia’s overall aim of

engagement on climate change is to support Vietnam with the implementation of its INDC.

Some guiding principles for determining options for concrete actions are as follows:

a) Australian (climate) aid is just one aspect of the bilateral relations between Australia and

Vietnam, and human resource development and knowledge exchange, as well as trade and

private investment are also important.

b) Climate change actions can be “stand alone” and specific, and they can be mainstreamed in

other aid efforts, as well as human resource development and knowledge exchange, trade

and private investment.

c) A focus on Vietnam’s priorities as expressed in the INDC is central, but Australia should

prioritise areas that do not yet receive sufficient support or attention from other DPs.

d) Australia should prioritise issues about which it has something special to offer, has

knowledge, experience and other strengths, with the example of climate change adaptation

in the Mekong delta standing tall, while the energy sector also offers engagement

opportunities.

e) Australia should learn from past and current weaknesses, and make full use of opportunities

for policy dialogues and the knowledge and lessons arising from its multilateral and NGO

partnerships as well as support volunteers network.

f) Adaptation is an area where ODA is important (technical assistance and financial aid),

because most adaptation actions are supported by the public sector.

g) Private sector operators must be particularly enabled by favourable Vietnamese policies for

mitigation of GHG emissions, upon which “green” Australian FDI and trade could grow.

4.3 CLIMATE CHANGE ADAPTATION: MEKONG DELTA Australia’s climate change adaptation engagement with Vietnam should be guided by the Paris

Agreement, especially Article 7 (adaptation), 8 (Loss & Damage) and 13 (transparency framework, i.e.

monitoring, reporting and verification).

Climate change adaption engagement would build on the main successes and strengths of Australia

in Vietnam in the period 2011-2016 (see section 2.3 and 2.5). Australia should concentrate on

maintaining, possibly expanding its role in Mekong Delta climate change adaptation. This will give it

“the right to speak” and enable it to be an authoritative voice on political, economic, social and

climate change issues that matter to Vietnam, Australia and the wider world. In partnership with

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some of the main DPs remaining active in Vietnam and with limited ODA, Australia could make a

major difference in climate-resilience of the Mekong delta, communities, households, women, men

and children.

Adaptation is an area in which Australia has very substantial technical resources on offer, including

climate science (re the effects of climate change; CSIRO) and agricultural research and development

(ACIAR), although the main technical assistance so far was delivered by GIZ, UNDP, World Bank and

international NGOs. Elements of this are already within the five investment programmes being

prepared under the AIP and could be made more explicit and boosted with limited (additional)

climate change ODA (see section 4.5).

A first and relatively small effort could be to draw lessons from the various programs under the DS as

reviewed in section 2.3 and 2.5, on practical and policy aspects. There is a very substantial body of

knowledge generated by the DS programs, including some excellent materials, but not all is equally

accessible in both Vietnamese and English. Accessible documentation of lessons learned should

inform future climate change programming, as well as roll-out of successful climate smart (livelihood,

enterprise) models and approaches by the GoV, provinces and enterprises.

Related to that, Australia could assist Vietnam in development of adaptation monitoring and

reporting systems and practices, which are weak in Vietnam (as witnessed by e.g. Vietnam’s national

Communications to the UNFCCC), and are expected to be reinforced under the agreements reached

in Paris in 2015. MONRE and MARD would be leading national partners and UNDP and some iNGOs

could be primary international partners.

Australia could continue to support coordination, joint DP-GoV partnership and effective governance

of the Mekong Delta as an active member of the emerging joint DP-GoV partnership. This will

maintain and enhance policy dialogues with active Australian participation.

It could support agriculture/aquaculture research on climate smart solutions and value chains with

important inputs from ACIAR and other Australian research organisations. Support could include

development and roll-out of additional climate smart agriculture/aquaculture-based livelihood

adaptation models in different zones of the delta, including explicit support to women’s livelihoods.

Australia can also build on experience in climate proofing of infrastructure in the Mekong delta

(though not necessarily large-scale infrastructure), as experience has been gained and partnership

with the Ministry of Transport (MOT) has already been established. Australia could seek (additional)

partnership on this with MARD, ADB and UNDP who are jointly implementing a project on climate

proofing of small scale infrastructure in the Northern Mountains region, and apply that in particular

in the Mekong delta (see also section 4.5).

Australia could consider continuing its partnership with Germany as a Mekong delta “post-ICMP”

project is being prepared (from 2018), e.g. by funding specific or additional components of that, or

for example “out-post” Australian experts in this programme. The latter could also happen in NGOs,

the World Bank’s ICRSL Project39 or the new UNDP/GCF coastal project (drawing lessons from

weaknesses in DS implementation as presented in section 2.3).

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Private sector leveraging will not be central on climate change adaptation. However, in the context

of the “Agro-Business Industrialisation scenario” that is recommended in the MDP40, Australia could

enhance connections between the private sector in Australia and Vietnam. Australia could add value

to (climate smart) products from the Mekong delta through research into value chains in for

example the fruit sector. Australian export promotion of and investment in e.g.

agriculture/aquaculture equipment and processing facilities (e.g. the dairy sector) could also support

the realisation of the Agro-Business Industrialisation scenario in the Mekong delta.

Building on its history, expertise and partnerships on disaster risk management in Vietnam,

Australian knowledge centres could be supported to partner with Vietnamese knowledge centres

and possibly the Australian and Vietnamese insurance industry to assess risks of future unavoidable

losses and damage, and help develop related insurance products. This could build on experience

gained in the past by SNV, the World Bank and UNDP in various partnerships with MARD, the

Ministry of Finance, the Bao Viet insurance company and others41.

The above suggestions (as well as suggestions on GHG mitigation – see section 4.4) will require that

the Australian Embassy maintains and possibly expands staff and/or accesses “out-posted” expertise

on climate change, to help expand the collective knowledge base and inform policy dialogues. This

should be based on relevant research as well as experience gained in different engagements.

4.4 GHG EMISSIONS MITIGATION: ENERGY Australia’s DS included some energy efficiency initiatives, and through multilateral funds such as the

CTF and GEF as well as support to the GGGI, Australia is also financing (indirectly and partially) other

GHG emissions and green growth initiatives in Vietnam. There have been some important positive

effects of this program. However, persistent fiscal (energy price) barriers to increased energy

efficiency and renewable energy deployment in Vietnam mean that the role of the private sector in

GHG emissions mitigation has so far remained limited, and there is a need to learn from weaknesses

re past engagement (section 2.4).

At the end of 2015 Australia had about 4 GW solar and 4 GW wind power installed power generation

capacity, which is substantial by international comparison and signals that Australian investors and

technology companies have major expertise and could have interest in the emerging Vietnamese

renewable power market. To enhance future GHG emissions reduction in Vietnam through

(domestic, foreign) private sector investments and trade, Australia could engage in policy dialogue re

deployment of energy efficient and renewable energy equipment - with wind and solar Photovoltaic

(PV) electricity showing particular potential. This could be supported by policy analysis in which

Australian knowledge centres and for example GGGI seek partnerships with Vietnamese knowledge

centres such as the Institute of Energy (IoE) and the Central Institute for Economic Management

(CIEM) which already have a history of such collaboration with for example the World Bank and

UNDP. Partnerships for both research and dialogue could also be sought with Vietnamese and

international business representatives including the Vietnam Business Forum42.

4.5 MAINSTREAMING CLIMATE CHANGE INTO AIP INVESTMENTS The economic diplomacy strategy and Aid Investment Plan (AIP) for the period 2015 to 2020 are

reflected briefly in section 4.1. While delivering on the goals, climate change considerations could be

mainstreamed in the five new investments under the AIP that were agreed in 2015, as follows:

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The Australia-Vietnam Women’s Economic Empowerment Partnership could include a strong

(climate) resilience aspect, also without additional climate change funding. Many economic

opportunities for women relate directly or indirectly to agriculture, livestock or aquaculture and

must build on sustainable rural livelihood models and research and pilots on climate smart

agriculture. Many such techniques have been developed, also under Australia funded agricultural

research and community based development projects, in different eco-regions of Vietnam. ACIAR

and other Australian knowledge centres should be able to provide technical backstopping in

association with other specialised international agencies such as ICRAF on agro-forestry along with

national research institutes and universities, such as Thai Nguyen University in the Northern

Mountains region. Within this partnership climate resilient models could be refined and rolled-out

for the benefit of women, as well as related economic activities such agricultural processing and

trade. Positive experiences should inform provincial and national policies and programmes such as

the New Rural Areas programme, where funds can often be made available to scale-up initiatives

that have proven themselves43.

Climate change effects such as sea level rise, saline water intrusion and increased drought risks put

pressure on water resources, and groundwater use in large parts of the Mekong delta has resulted in

rapid decline of groundwater levels and land subsidence at a rate of around 2 cm/year according to

some sources, which is much higher than sea level rise. The combination of climate change and

development effects poses a major threat to water supply in the delta, including the coastal zone

and the peninsula. Within the Australia-Vietnam Enterprise Development Partnership there may be

scope for support to public private partnerships on water supply. Water supply to urban and

industrial zones is largely the responsibility of local state-owned water supply companies, operating

in an environment with very low, regulated water prices and limited interest of foreign or domestic

private investors. However, reforms are needed as public finance is limited (with Vietnam’s

increasing public deficit and debt) whereas demand in cities and industrial zones is increasing, so

private investment must be mobilised. Australia could support policy relevant research on water

pricing and private investment potential and technical opportunities for water storage and

sustainable water supply in specific locations in the Mekong delta, large parts of which faced an

historical drought in the first half of 2016. Doing this in partnership with (specific) city authorities;

local water supply companies; local research organisations; and potential investors could lead to a

commercial deal between different parties. Partnership or exchanges could also be sought with the

few agencies having experience in this sector, including Belgium Technical Cooperation (BTC) and

Vitens Evides International (Dutch), which operates in some cities in the Mekong Delta and Ho Chi

Minh City 44. Success would inform national policies on water supply and initiatives in other localities.

The Australia-Vietnam Enterprise Development Partnership could also help to enhance value chains

that focus on green, sustainable agriculture and aquaculture products for which there are growing

domestic and international markets. The MDP recommends the “Agro-Business Industrialisation”

scenario and makes suggestions for spatial planning and a development path that enables

specialisation in adapted livelihoods and businesses in different zones of the delta (certain products,

processing industry). This requires quality improvements and innovation in products, processing and

marketing, as well as external investment and research concerning different elements in value

chains. Private companies are investing and some research organisations are supporting this

development, but there is as yet limited coordinated international support. Opportunities for

equipment suppliers from Australia may exist or be developed in e.g. the dairy industry and fruit

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cultivation and processing (see section 4.3). Vietnamese producers and processors also have

certification needs, to better access international markets. ACIAR and other Australian agricultural

research organisations in partnership with national knowledge centres should research climate

smart crops, varieties, farming systems, and livelihood models. This has already happened but the

links between programs under the Delivery Strategy (2011-2016) were not as strong as would have

been possible. Research organisations should work closely with extension services and NGOs who

have piloted models and sometimes started to scale-up. Evidence that climate-smart agricultural

techniques and approaches work is available and evidence of demand in different markets is needed

too. Adding value through processing and marketing quality niche products requires certification, for

example organic certification, and Australia has certification expertise as well as a sizeable market

for high quality niche products.

The Australia-Vietnam restructuring for a more Competitive Vietnam Partnership (Phase 2) could

take on energy market reform aspects as outlined in section 3.3 and 4.4, with very high significance

for Vietnam’s future GHG emissions from increased energy efficiency and renewable energy

investments – suggestions for possible actions are made in section 4.3. Competitiveness, trade and

investment also have adaptation aspects, as production units and trade (logistics) facilities need to

be resilient in the face of climate change effects. For example, Australia's major imports from

Vietnam include furniture and footwear, which are industries that can be vulnerable to climate

change effects. One of the bigger Australian investors in Vietnam is BlueScope Steel which is a sector

with high energy consumption and emissions, and a strong interest that energy and other supplies as

well as production facilities are not disrupted by weather-related events. Other big investors are ANZ

Bank and QBE, with the latter one of the world’s largest insurance companies whereas insurance is

becoming increasingly important in addressing losses and damages associated with climate change

(see section 4.3 for suggested actions).

Within the Australia-Vietnam Transport Partnership climate change is also an important aspect that

could be made explicit and potentially enhanced. Disaster risk management was integrated in the

design and implementation of the Cau Lanh bridge and such climate proofing is also relevant to

smaller scale and other types of infrastructure. Lessons learned within the partnership (with the

Ministry of Transport) may be applied elsewhere and the partnership could also apply lessons in the

Mekong delta from other initiatives such as a nearly completed UNDP-ADB project on climate

proofing of rural infrastructure in the Northern Mountains region (which is a partnership with MARD

who are responsible for a range of infrastructure). That project and the Australia-Vietnam Transport

Partnership could jointly address / or be used in a new initiative for improving national design and

construction standards for different types of infrastructure in the context of climate change as well

as strengthened planning, financial and enforcement capacities, a potentially major impact on long-

term resilience of Vietnam, including the Mekong delta in particular.

The preliminary design of the Australia-Vietnam World Bank Partnership mentions climate change

effects as a threat in the contextual analysis and also mentions rising energy consumption, but there

is limited analysis of this whereas more words are spent on environmental quality and pollution. The

proposed ‘climate resilience in the Mekong Delta’ pillar of Phase 2 of this partnership, suggests work

on: ‘low regret climate resilient investments’ and ‘strengthen climate-resilient land, water and

cropping practices’, without making this specific or linking this to existing and closed programs

supported by Australia or others. Many adaptation suggestions including mainstreaming of

adaptation in other partnerships / projects, knowledge products and additional climate proofing

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investments in this review paper could be considered to be included and thus make the design more

specific and relevant (see section 2.3, 3.2, and 4.3). The Mekong delta pillar is also not linked to the

energy (GHG emissions) challenges, whereas the Mekong delta is slated to host coal-fired power

plants with related transport and pollution challenges, while it has major potential for renewable

energy generation (solar and wind energy, also power production and industrial heating with

agricultural residues). This could build on experience with that in the Mekong delta (including with

World Bank/ Swiss support to energy from agricultural residues).

4.6 AUSTRALIA, JOINT DP-GOV PARTNERSHIPS AND CLIMATE POLICY ENGAGEMENT There are some additional needs and opportunities that should be considered, in particular if

Australia wants to remain active in policy dialogues and support innovations:

UNDP will be initiating a USD30m project funded by the GCF, with a focus on coastal communities /

housing and mangrove restoration /coastal protection in some provinces (including the Mekong

delta), as well as a learning and policy component concerning all coastal provinces on loss and

damage. The latter will be a continuation of UNDP’s engagement with disaster risk management in

Vietnam, apart from funds towards emergency responses and recovery, such as recovery from the

drought and saline water intrusion in 2016. Some NGOs will also continue to work in this space.

However, the few multilateral and bilateral donors remaining will focus on adaptation (in particular

the Mekong delta), including the ICMP/GIZ and the World Bank and not on disaster risk reduction

and loss and damage from climate change. Australia would be able to maintain its long held

strengths in DRR (upon which climate change adaptation interventions were built in the Delivery

Strategy 2011-2016) by for example partnering with UNDP and NGOs through a component related

to learning and sharing international lessons and potential mechanisms on loss & damage which is

consistent with Article 8 of the Paris Agreement. This partnership would be with MARD as well as

MONRE, building on existing links and strengths, and could include players in the insurance industry

(see section 4.5). It could be concretised in a “small” way through “out-posting” of experts in this

UNDP/GCF project or linking to Australian knowledge organisations. Lessons from this could be

shared and related policy dialogue could be generated in existing forums (see section 3.2) and the

emerging joint DP-GoV partnership on the Mekong delta (see below).

Australia built a strong network with policy makers, officials, NGOs and DPs on climate change

adaptation in the period 2011-2016, which was on the back of a successful history of engagement on

disaster risk reduction (DRR) in the Mekong delta and the central coastal region. It is now expanding

its regional engagement in particular through the partnership on women’s economic empowerment

(including ethnic minority women) in the Northern Mountains region, and this work is likely to have

a resilience focus, meaning it will be highly relevant in the face of climatic stresses and shocks and

build on earlier work on DRR and climate change adaptation (livelihood strengthening). Inputs into

policy dialogues in Vietnam, visibility in Vietnam through media and other communications, and thus

a degree of influence should build on those strengths and would be achievable through

mainstreaming of climate in the planned investments under the AIP and potentially a relatively small

financial envelope for additional activities. Mainstreaming adaptation is also suggested in some of

the other AIP Partnerships (section 4.5), including the Australia-Vietnam World Bank Partnership. In

addition, several suggestions are made for adaptation engagement with a focus on the Mekong

delta in section 4.3. To make full use of accumulated experience an active role should be maintained

and support could be provided by Australia to the emerging joint DP-GoV partnership on the

Page | 24

Mekong delta, certainly given the comparative success of successive Mekong Delta Forums. As

explained in several sections, this would require substantial climate change personnel/expertise at

the Australia Embassy and possibly “out-posted” Australian experts in projects or partnerships.

Should Australia decide to mainstream GHG emissions reduction in some of the AIP partnerships

(section 4.5) and take up other suggestions on this (section 4.4), it would need to consider taking an

active role in the joint DP-GoV Vietnam Energy Partnership Group, which is currently being designed

with support from the EU Delegation in Vietnam and which is expected to be focused on policy

dialogues. Draft priorities of this new group include enabling policies for renewable energy

production (including FDI) and power sector reform.

4.7 AUSTRALIA AND CLIMATE CHANGE IN VIETNAM: COMMUNICATION HIGHLIGHTS If some or many of the above suggestions would be implemented, then various communication by

the Embassy could include the following:

Australia supports the implementation of the Paris Agreement under the UNFCCC, specifically

Vietnam’s INDC, including review and implementation of targets on adaptation and GHG

emissions mitigation in the INDC that was submitted in 2015. This signifies close alignment of

Australia’s support with Vietnamese policies.

Vietnam will / has increase(d) its ambition on increasing resilience in the face of climate change /

GHG emissions mitigation. It is doing so within its own means and with international support,

including Australian support to […]

The Australia-Vietnam Climate Change Delivery Strategy 2011-2016 was successfully

implemented. It impacted particularly on the Mekong delta which is highly vulnerable to the

effects of climate change. In partnership with Germany, the World Bank, UNDP and NGOs

Australia helped develop coastal protection and climate smart livelihood models; built capacities

of thousands of officials, teachers, women and mean; and improved climate resilient transport.

The Mekong delta is one of the most exposed regions to sea level rise, river floods as well as

droughts and saline water intrusion that are all getting worse as a result of climate change, and

it is affected by development challenges at the same time. It continues to require priority

support from the Government of Vietnam and the international community as one of the most

vulnerable regions to the effects of climate change in the world. Good adaptation will prevent

major economic losses in the short and long term, and a prosperous, safe and sustainable delta

is possible with the right policies, plans and investments. Further Australian support to the

people, communities, businesses and infrastructure in the Mekong delta and coastal regions of

Vietnam will include […] which is expected to lead to […].

Climate change adaptation is a central aspect in the Australia-Vietnam Women’s Economic

Empowerment Partnership, leading to the co-benefits of greater gender equality, increased

resilience of livelihoods and greater food security in the Northern Mountains region of Vietnam.

Vietnam will / has increase(d) its ambitions on GHG emissions mitigation [compared to the INDC

that it submitted to the UNFCCC in 2015] in particular through reinforced efforts to increase

energy efficiency in industry and expansion of renewable energy generation as per its

Renewable Energy Development Strategy. It has created enabling policies for private sector

investment in energy efficiency and renewable energy, with international support, including

Australian support to […]. Australian FDI in [energy efficient industrial production, renewable

energy] includes […].

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ANNEX 1 SUMMARY OF CLIMATE CHANGE PORTFOLIO (DS 2011-2016) Program Description Amount

Climate Change

and Coastal

Ecosystems

Management

Program

Through an innovative partnership with Germany, Australia is helping Vietnam

manage and protect its coastal ecosystems and respond to the impacts of climate

change. The five-year program is working with communities in five provinces in

the Mekong Delta to develop climate change adaptation plans and to find

practical solutions to address the range of environmental hazards being faced in

coastal ecosystems. The program is also supporting national level policy

development on climate change adaptation that is informed by provincial

experience.

AUD23 million

2012 - 2016

Community-

based Climate

Change Action

Grants

Australia is working with Australian and international NGOs to deliver six projects

that will build the resilience of communities to the impacts of climate change,

help communities reduce or avoid GHG emissions, and address key development

priorities. Around 270,000 vulnerable people will directly benefit from these

partnerships.

AUD15 million

2012 - 2014

Community Based

Disaster Risk

Management

(CBDRM)

To reduce economic losses and fatalities resulting from flood or drought events,

AusAID is co-financing a drought and flood mitigation project with ADB focusing

on the implementation of community-based disaster risk management (CBDRM)

activities across 63 communes in two flood-prone provinces in Vietnam’s Mekong

Delta region (community preparedness; small-scale community infrastructure;

two studies for Vietnam on cross-border flood management and water control

infrastructure).

This is complemented by an institutional strengthening partnership with UNDP to

help build the capacity of MARD’s Disaster Management Centre in the

implementation of its national CBDRM program and the coordination of DRM and

Climate Change Adaptation more broadly.

AUD5.85 million

2013 - 2016

AUD2.8 million

2012 - 2015

Energy Efficiency

Standards and

Labelling

Implemented through a partnership between DRET and Vietnam’s Ministry of

Industry and Trade, this project will assist Vietnam to develop and implement

lighting and appliance energy efficiency standards, registration, labelling, testing,

compliance and monitoring mechanisms. This will help consumers to make

informed purchasing decisions that reduce the country’s energy intensity and

emissions.

AUD2.8 million

`

2012 - 2014

Energy Efficiency

Partnership with

the World Bank

AusAID has identified energy efficiency as an area of focus under our bilateral

strategic partnership with the World Bank in Vietnam. Together we have

identified the Distribution Efficiency Project as an initiative that would benefit

from additional support with a focus on building the capacity within the Ministry

of Industry and Trade (MOIT) and Vietnam’s Power Companies in the area of

power sector reform and tariff regulation for improved energy efficiency.

AUD7.6 million

2012 - 2016

Climate

Innovation Centre

AusAID is contributing to the establishment of a Climate Innovation Centre (CIC)

in Vietnam that will support business development of clean technologies. Initiated

by the World Bank a CIC in Vietnam has been welcomed by the GOV and is also

attracting interest from the UK aid agency DFID to co-fund its establishment.

AUD6 million

2013 - 2017

Downscaled

climate change

projections

Australia is partnering with CSIRO to work with the Government of Vietnam to

complete high-resolution downscaling of climate change projections for Vietnam.

The projections will help Vietnam prioritise and plan their climate change

responses.

AUD2 million

2012 -2013

Support Program

to Respond to

Climate Change

In 2011, AusAID joined other donors (Japan, France, the World Bank, Canada and

South Korea) in a structured process of policy dialogue under the Support

Program to Respond to Climate Change (SP-RCC) to promote a

comprehensive/multisectoral climate change response. Successful achievement

of policy actions for 2011 resulted in Australia’s release of AUD8 million in 2012 to

support the Government of Vietnam in climate change planning, research and

investment. Future contributions are anticipated in 2013 and 2014.

AUD8 million

2012

Page | 26

ANNEX 2 SUMMARY OF AUSTRALIA’S MAIN CLIMATE CHANGE RELATED

INVESTMENTS IN VIETNAM (UPDATE NOVEMBER 2015)

Focus Current and recent activities supported by DFAT

ADAPTATION AND

DISASTER RISK

REDUCTION

with a focus on the

Mekong Delta

Total: $36.15

million

Rationale:

Economic

development will be

undermined if

critical

infrastructure and

vulnerable

communities are not

protected from

disasters, climate

change and

environment risks

Integrated Coastal Management Program (ICMP) (Up to $16.5 million 2011-2017) Australia, in partnership with Germany, is helping Vietnam manage and protect its coastal ecosystems to respond to the impacts of climate change. The program is working with vulnerable communities in five provinces of the Mekong Delta to develop climate change adaptation plans and find practical solutions to improve coastal protection and flood management, and identify alternative income-generating opportunities. The program generates lessons on the ground to inform provincial socio-economic development plans and national level policy.

Community-based climate change action grants ($15 million 2012-2015). Australian, international NGOs and local partners are delivering six projects across ten provinces of Vietnam, that help communities to improve their livelihoods by reducing the impacts of disasters and climate change, and reducing GHG emissions. The program focuses on community-based disaster risk reduction, improved food and water security and innovative farming practices, including in the Mekong Delta. Around 247,000 vulnerable people have directly benefited from these partnerships.

Studying the Impact of Mainstream Hydropower on the Mekong Delta ($1.5 million 2012-2015) Australia is supporting Vietnam to conduct the Mekong Delta Study on the impacts of upstream hydropower projects on the Delta and floodplains of Vietnam and Cambodia. A strategic assessment on mainstream dam construction in 2010 predicted serious impacts to water and land security. Hence, the Vietnam government decided to undertake this independent study in order to quantify expected impacts.

Building Resilience in the Mekong Delta ($350,000 2014-2015). This technical assistance provided through the World Bank is helping identify and prioritize climate resilient infrastructure and non-structural measures for the Mekong Delta, and to build regional and provincial-level planning capacity for resilient investment decisions. It will enhance understanding of potential social, economic and environmental trade-offs through stakeholder consultation (including the Mekong Delta Forum in Feb 2015).

Institutional strengthening for disaster risk management ($2.8 million 2012–2015). In partnership with UNDP, Oxfam, the Women’s Union and others, Australia is building the capacity of Vietnam’s disaster risk management institutions focusing on the Central Committee for Flood and Storm Control, to improve coordination, lesson sharing and the legal framework for managing disasters and adapting to climate change, with strong participation of women in decision-making and action.

Climate-proofing the Central Mekong Delta Region Connectivity project. Australia has provided technical assistance to incorporate climate-proofing and environmental safeguards into the Cao Lanh bridge project (Australia’s contribution to this is up to $160 million 2011-2018), to ensure the ongoing resilience of this major development investment connecting HCMC to goods and services from the Southern Coastal Region and GMS Southern Coastal Corridor.

Page | 27

Focus Current and recent activities supported by DFAT

GREEN GROWTH

Clean energy,

efficient production

and a thriving

private sector

Total: $13.1 million

Rationale

By adopting

innovative clean

technologies and

reducing barriers to

private investment,

Vietnam can foster

an efficient,

competitive

economy

Vietnam Climate Innovation Centre (VCIC) ($3 million 2013-2016). Australia is supporting establishment of the VCIC, through the World Bank and with co-funding from the UK. Being launched on 7 December 2015, it will provide small and medium enterprises with the seed capital, skills and networks they need to develop and bring to the market innovative yet commercially viable climate-smart technologies, thus promoting private sector engagement in green growth and supporting Vietnam’s aims as a middle-income country to reshape the economy and increase competitiveness.

Energy Efficiency Standards and Labelling ($2.5 million 2012-2015). Australia’s Department of Industry is assisting Vietnam’s Ministry of Industry and Trade (MOIT) to ensure household appliances sold in Vietnam are more energy efficient. The project builds the Ministry’s capacity to develop, manage and evaluate new standards, including implementing mandatory labelling of household appliances and setting up a website to allow manufacturers and suppliers to register their products online to comply with the new regulations.

Distribution Efficiency (up to $7.6 million 2012-2016). Through this project, in partnership with the World Bank, Australia is providing technical assistance and capacity building to help Vietnam apply smart grid technology and develop appropriate tariff regimes to facilitate reform in the power sector.

PLANNING &

INVESTMENT

Integration of

climate change and

environment into

Vietnam’s broader

development goals

Total: $ 16.3 million

Rationale

Climate change and

disasters impact all

sectors of the

economy and

require coordinated

responses.

Policy and planning

Mekong Delta development planning. Australia is actively engaged in joint donor efforts to develop a planning framework to help Vietnam coordinate development investments in the Mekong Delta, a region critical to the nation’s economic growth yet highly susceptible to climate change impacts.

The Support Program to Respond to Climate Change (SP-RCC) ($14 million contribution from Australia 2012-2014) is a joint trust fund that has mobilized over $200 million of donor finance through a performance-based funding mechanism to support Vietnam’s key ministries including MOF, MOIT, MOT, MONRE and MARD to take policy actions that incorporate consideration of climate change in affected sectors of the economy. It also supports investment in adaptation projects that have been prioritised by the Prime Minister of Vietnam.

Building capacity and knowledge

High resolution climate change projections ($2 million 2011-2013) Australia’s science agency, CSIRO has partnered with the Government of Vietnam to build capacity in key technical institutes to analyse current and predict future climate impacts. The data that has been produced will inform Vietnam’s official climate projections and be used to guide national policy and action to increase the resilience of development in critical sectors including infrastructure and urban planning.

Human Resources Development. Australia and Vietnam have jointly identified environmental science and engineering, water management and related themes as priority fields of study for Vietnamese students who win scholarships to study in Australia. Targeted fellowship programs have been implemented to train natural resource managers in vulnerable coastal zones, and teachers and community trainers have received training on managing environment, climate and disaster challenges.

Mobilising finance and resources

Australia, with the World Bank, is supporting Vietnam’s Ministry of Planning and Investment (MPI) to develop a resource mobilization framework ($300,000 2014-2016) to enable and track support for Vietnam to realize the goals in its climate change and green growth strategies. The assistance will increase effectiveness of public spending, improve reporting, and encourage private sector engagement.

Total: $ 65.55 million

Page | 28

ANNEX 3 CLIMATE CHANGE LEADERS IN THE GOVERNMENT OF VIETNAM

MONRE

HE Tran Hong Ha, MONRE minister, vice-Chair of the NCCC, Chair VPCC

Nguyen Van Tue, DG Department of Hydro-Meteorology and Climate Change (DHMCC)

Pham Van Tan, deputy DG DHMCC, key-negotiator UNFCCC, secretary NCCC and VPCC, and

key player SPRCC

Nguyen Khach Hieu, deputy DG DHMCC, key-negotiator UNFCCC, focal point CDM and

national communications

Nguyen Van Thang, DG Institute of Meteorology, Hydrology and Climate Change (IMHEN)

Pham Phu Binh, DG International Relations Department

Le Ngoc Tuan, deputy DG International Relations Department

Do Nam Thang, deputy DG International Relations Department

Tran Thuc, vice-Chair VPCC, former DG IMHEN

Mai Trong Nhuan, vice-Chair VPCC, former President Vietnam National University

MARD

HE Nguyen Xuan Cuong, MARD minister, vice-Chair of the CCFSC

Hoang Van Thang, Vice Minister (Water resources)

Chu Van Chuong, Deputy DG International Relations Department

Dinh Vu Thanh, Head Climate Change Coordination Office

MPI

Nguyen The Phuong, Vice Minister (Green growth)

Pham Hoang Mai, DG Department of Science, Natural Resources, Environment and

Education

Nguyen Tuan Anh, deputy DG Department of Science, Natural Resources, Environment and

Education

MOIT

Hoang Quoc Vuong, Vice Minister (Energy)

Hoang Van Tam, Deputy Head Climate Change, Industrial Safety techniques and

Environment Agency (ISEA)

Pham Trong Thuc, Director Department of New and Renewable Energy under the General

Department of Energy

Trinh Quoc Vu, Director Department of Science, Technology and Energy Saving Energy under

the General Department of Energy

Page | 29

ENDNOTES 1 AusAID (2011). Australia-Vietnam Climate Change Delivery Strategy 2011-2016 2 These examples link to key elements of the ToC as represented in Figure 2 in AusAid (2011) 3 This is based on many ICMP reports and internal assessment such as relevant “aid quality checks” by DFAT. See http://daln.gov.vn/en/icmp.html for a very large amount of information generated by the program. One key report is: GIZ (2014) ICMP / CCCEP PHASE I: FINAL REPORT (Integrated Coastal and Mangrove Protection in the Mekong Provinces for the Adaptation to Climate Change / Climate Change and Coastal Ecosystems Programme). GIZ on behalf of the Australian Department of Foreign Affairs and Trade (DFAT) and the German Federal Ministry for Economic Cooperation and Development (BMZ). 4 CARE, GIZ, ICMP and UN Women (June 2015) Making it Count - Integrating Gender into Climate Change and Disaster Risk Reduction: A Practical How-To Guide 5 CCWG (2015) Community-Based Climate Change Initiatives in Vietnam - Experiences of the members of the Climate Change Working Group (CCWG). Hanoi: CARE, Malteser International, Oxfam, SNV. 6 Prime Minister Decision 1002/QĐ-TTG on “Awareness raising and Community-based Disaster Risk Management”, of 13/07/2009. This targets the 6,000 most disaster prone communities in Vietnam. 7 This is based on relevant “aid quality checks” by DFAT and e.g.: Margaretta Ayoung and Hoang Van Duong (2015) Strengthening institutional capacity for disaster risk management in Vietnam, including climate change related disasters-Phase II (SCDM II). Mid-term Review – Final Report 8 DHI & HDR (2015) Study on the impacts of mainstream hydropower on the Mekong river – Final Report. Prepared for the Ministry of Natural Resources and Environment of the Government of Vietnam. 9 Authors and other leading scientists met on 14 June 2016 to discuss the following studies: WRU, SIWRR, SIWRP (2015). Research on Integrated Water Resources Management in the context of climate change, sea level rise, and rapid socio-economic development in the Mekong Delta in Viet Nam. Water Resources University (WRU), Southern Institute of Water Resources Research (SIWRR) and Southern Institute for Water Resources Planning (SIWRP). [updated February 2016] SIWRP (2016a). The Project on Flood Control Planning in the Mekong Delta by 2020, Vision to 2030. Summary Report. Ho Chi Minh City: Southern Institute for Water Resources Planning (SIWRP); and updated: SIWRP (2016b). Additional Research on Proactive Flood Control Measures in Integrated Water Resources Management and integration into flood control planning in the context of climate change in the Mekong Delta in Viet Nam. Summary Report. Ho Chi Minh City: Southern Institute for Water Resources Planning (SIWRP). 10 World Bank (2016). Project Appraisal Document on a Proposed Credit in the Amount of SDR 218.8 Million (US$310 Million Equivalent) to the Socialist Republic of Vietnam for a Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project. International Development Association. Report No.: Pad1610. May 19, 2016. World Bank - Environment and Natural Resources Global Practice, East Asia and Pacific Region. 11 Strategic Partnership (2013) Mekong Delta Plan: Long-term vision and strategy for a safe, prosperous and sustainable delta. (Partners: Viet Nam’s Ministry of Natural Resources and Environment and Ministry of Agriculture and Rural Development; the Netherlands Ministry of Infrastructure and Environment, Partners for Water programme, Embassy of the Netherlands in Hanoi, Royal HaskoningDHV, Wageningen University and Research Centre, Deltares, Rebel, Water.NL). 12 This is based on Australia’s Aid Quality checks; World Bank (2014) Vietnam Climate Innovation Center: VCIC. A Business Plan for the financing and implementation of a CIC in Vietnam. Information for Development Program (infoDev); http://www.vietnamcic.org/ and personal observation by the author. 13 As is the case with the cancelled ADB program on CBDRM (see section 2.3), this delay was partly due to remote management (Washington DC; in the ADB case it was Manila), as well as complex Government of Vietnam procedures that needed to be navigated. Future Australian support to multilateral organisations need to consider carefully if there would again be an example where the resident mission does not have the management capacity and / or authority. 14 This is based on e.g. Charles Michaelis (2015) Vietnam Energy Efficiency Standards and Labelling Programme. Evaluation. Final Report. Prepared for the Australian Government, Department of Industry and Science by: Strategy Development Solutions Ltd 15 The Clean Technology Fund (CTF) is one of the multi-donor Climate Investment Funds (CIFs). It finances transfer of low-carbon technologies, and is channelled through multilateral development banks. Australia is one of the financiers. See: https://www-cif.climateinvestmentfunds.org/fund/clean-technology-fund 16 See several “Aide Mémoire” of visits by World Bank project managers from 2013-2015

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17 UNDP Viet Nam (2012). Fossil Fuel Fiscal Policies and Greenhouse Gas Emissions in Viet Nam: Subsidies and Taxes in Viet Nam’s Energy Sector, and Their Effects on Economic Development and Income Distribution in The Context of Responding to Climate Change. Hanoi: United Nations Development Programme. UNDP Viet Nam (2014). Green Growth and Fossil Fuel Fiscal Policies in Viet Nam - Recommendations on a Roadmap for Policy Reform. Ha Noi, Viet Nam; UNDP Viet Nam (2016). Greening the Power mix: Policies for Expanding Solar Photovoltaic Electricity in Viet Nam. Ha Noi, Viet Nam 18 World Bank (2014) Exploring a Low-Carbon Development Path for Vietnam - January 6, 2014. Pre-publication version. ESMAP 19 AusAid (2012) Vietnam: Support Program to Respond to Climate Change (SP-RCC). A Strategy for AusAID’s Engagement: Design Summary and Implementation Document (DSID). March 2012 20 Personal observations of the author, from participation as observer in a wide range of SPRCC meetings since its inception in 2008 21 This is known as the CPEIR: Climate Public Expenditure and Investment Review MPI, WB, UNDP (2015) Laying the foundation for resilient low-carbon development through the Climate Public Expenditure and Investment Review. By experts of the Ministry of Planning and Investment (MPI), the World Bank (WB) and the United Nations Development Programme (UNDP) 22 Jack Katzfey and Hoang Cat (2014) Activity Completion Report: High-resolution Climate Projections for Vietnam. Hanoi, Vietnam. CSIRO- DFAT R4D Alliance. 23 http://vnclimate.vn/ and http://climatetool.vnclimate.vn/ 24 Trần Thục, Koos Neefjes, Tạ Thị Thanh Hương, Nguyễn Văn Thắng, Mai Trọng Nhuận, Lê Quang Trí, Lê Đình Thành, Huỳnh Thị Lan Hương, Võ Thanh Sơn, Nguyễn Thị Hiền Thuận, Lê Nguyên Tường (2015) Viet Nam Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation, Hanoi, Viet Nam: Viet Nam Natural Resources, Environment and Cartographic Publishing House. http://www.vn.undp.org/content/vietnam/en/home/library/environment_climate/viet_nam_special_report_on_managing_the_risks_of_extreme_events_and_disasters/ 25 Jack Katzfey and Hoang Cat (2014) 26 MPI, WB, UNDP (2015) 27 Prime Minister Decision No. 2139/QĐ-TTg of 5 December 2011 28 This is figure 3.16 in: MPI (2015). Financing Vietnam’s Response to Climate Change: Smart Investment for a Sustainable Future. Laying the foundation for resilient low-carbon development through the Climate Public Expenditure and Investment Review. Vietnam Ministry of Planning and Investment (MPI). This publication is nearly identical to: MPI, WB, UNDP (2015) 29 Some countries have not yet phased-out their ODA relationship but do not provide climate finance, such as Ireland and Canada. But the latter may phase-in climate financing following the recent change of Government. 30 Strategic Partnership (2013) 31 Decision no. 1002/QĐ-TTG approved by the Prime Minister on 13.07.2009, “Awareness raising and Community based Disaster Risk Management” 32 World Bank (2016) 33 UNDP Viet Nam (2014) & UNDP Viet Nam (2016). 34 UNDP-Viet Nam (2014). 35 AusTrade (2016) Renewable Energy. The Australian Trade and Investment Commission 36 See: UNDP Viet Nam (2014); UNDP Viet Nam (2016). 37 Australia holds 1.40% of voting power in the International Bank for Reconstruction & Development (IBRD): http://siteresources.worldbank.org/BODINT/Resources/278027-1215524804501/IBRDCountryVotingTable.pdf 38 Australia contributed a grant towards the SPRCC under the Climate Change Delivery Strategy 2011-2016. 39 World Bank (2016) 40 Strategic Partnership (2013) 41 See e.g. a case study in: CCWG (2015) Community-Based Climate Change Initiatives in Vietnam - Experiences of the members of the Climate Change Working Group (CCWG). Hanoi: CARE, Malteser International, Oxfam, SNV. http://www.ngocentre.org.vn/pub/community-based-climate-change-initiatives-documentation-ccwg 42 See: http://www.vbf.org.vn/ The VBF organises bi-annual forums co-chaired by the Minister of Planning and Investment, the World Bank, IFC and leading business members of the VBF. They have an energy working group.

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43 Many NGOs level have attempted to scale-up successes by building links with district and provincial authorities and thus aiming for scaling up, some successfully as has been documented in for example: CCWG (2015) 44 See e.g. www.vitensevidesinternational.com